About Direct Response Marketing

Unlike traditional distribution methods, direct response marketing can make a new product nationally available virtually overnight by using a combination of cable and broadcast direct response television, home shopping, direct response print ads, credit card syndication, catalog sales and retail. A campaign's focus should be on a product's benefits (not its features) each step of the way.

Direct Response Television ("DRTV") - Although actual components of a tailored direct response rollout vary by product, DRTV is almost always used as our initial thrust. DRTV commercials are typically either infomercials or short-form spots. Infomercials are thirty minutes in length and fill an entire "half hour" programming slot. Spots are two minutes (or shorter) in length and are inserted in regular programming.

Infomercials and spots are both effective ways to sell product via product demonstration. Although DRTV can be extremely direct and often utilizes high pressure sales techniques, these same TV impressions create unparalleled product awareness. As Seen On TV products attain national brand awareness for only pennies on the dollar. Although many consumers never purchase product via DRTV, these same consumers are nevertheless presold, meaning they routinely make purchases via catalog or in retail stores based on DRTV impressions.

Over a product's life cycle, DRTV sales typically represent only 7%-14% of total unit sales. This means that for every unit sold via DRTV, an additional seven to fifteen units are sold via other methods based solely on the impressions made during the DRTV campaign.

Shopping Channels - Opportunities also exist to create significant television impressions and profits via the major television shopping channels, of which QVC and The Home Shopping Network are the largest. These companies utilize announcers to sell product via live television and work under a guaranteed sales arrangement.

Direct Response Print - DR Print includes newspaper and magazine ad placements and free standing inserts ("FSI"). For example, Parade is a magazine included in the Sunday edition of most major newspapers and reaches over 35 million households, while FSI's are found in the coupon sections in most of these same newspapers.

Credit Card Syndication - Credit card syndication is another frequently used direct response tool. Tri-fold, four color advertisements are inserted in monthly billing statements for virtually every department store, oil company and bank credit card in the US, including VISA, Mastercard, Discover, Mobil, Shell, Sears and Citibank. Customers purchase product by simply checking a box on an order form and returning the form with their monthly credit card payment. Since these ads carry the name of the credit card issuer, these products receive the card issuer's perceived endorsement.

Catalog Sales - Catalogs are the most widely accepted form of direct response marketing and include Sharper Image, Spiegel, Harriett Carter, Taylor Gifts and Hanover House to name just a few. Catalogs have longer lead times (e.g., four months or longer), so planning is necessary.

Retail - The timing of any retail launch is critical and the retail launch of an As Seen On TV product is no different. DRTV has a positive impact on retail sales and pricing; however retail availability has a negative impact on DRTV sales. Accordingly, products should be introduced into retail at the right time - not the earliest time. Successful As Seen On TV products with proven sales and advertising histories can request and often receive preferred payment terms, higher initial stocking orders, better wholesale pricing, and more visible shelf space (e.g., endcap positioning, plan-o-gram placement, etc.).

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