DMEC

● A few years ago, the pizza chain sent out triangular mailers that incorporated recipients’
names and a print resembling a slice of pizza on the front, asking “[Name], hungry for a
slice?” When consumers turned over the mailer, they found details about the company’s free
slice offer.

● With this marketing effort, Papa John’s killed two birds with one stone: The unique shape and
design attracted attention, and the personalization strengthened engagement.
● Ikea is known for its hefty catalogues, but
that’s not the only thing the discount
furniture store sends in the mail. A bland,
manila envelope emblazoned with the
words “Decorating your home has never
been easier” doesn’t exactly sound like a
revolutionary piece of direct mail – that is,
until the recipient opens it and is treated to
a miniature pop-up bedroom impeccably
decked out with furniture and trimmings
from Ikea, right down to the tiny storage
boxes on the bookshelf. This piece was both engaging and interactive, appealing to
the inner decorator in everyone.
● Telemarketing -

1
● Coupons -

● Customer Loyalty Card -

2
❖ Direct Marketing -
● The direct mail order business in USA gave birth to direct marketing
● It served the needs of remote farmers, ranchers, settlers and new townships.
● It is cost-effective, measurable and reliable ways of manag ing customers
● Technology has made it so much easier for us to communicate directly with our customers

3
 ●

Mass marketing techniques less effective in getting the response you want from your
customers - though of course they are still very powerful in developing and sustaining
branding.

❖ Printing Press -
● Before we can trace the history of direct mail marketing, let’s rediscover how print got its
start.
● It was around 1440 when German blacksmith/goldsmith Johannes Gutenberg invented the
printing press. Naturally, with this discovery, he became more widely known as a printer
and publisher. His introduction of mass-producing mechanical, moveable type started a
revolution in Europe
● That’s when William Caxton entered the printing picture. Caxton was a merchant and
writer who became the first English retailer of books. He had a printing press (believed to
be the first of its kind in England) set up in the Westminster Abbey Church where he
created pamphlets to order his publications. Among them was an English translation of
the Bible,
“Aesop’s Fables,” and Geoffrey Chaucer’s “The Canterbury Tales.”.

❖ First direct mail campaign

● The American Anti-Slavery Society printed and mailed marketing materials to religious
and civic leaders in the south in 1835. This is likely the first direct mail campaign. They
created a mailing list from names in newspapers and city directories, among other public
lists.
● Today Direct marketing consists of any marketing that relies on direct communication or
distribution to individual consumers, rather than through a third party such as mass media.
Mail, email, social media, and texting campaigns are among the delivery systems used. It
is called direct marketing because it generally eliminates the middleman, such as
advertising media.

Lester Wunderman -

4
 ●

● Born in the Bronx and educated in NYC, Lester Wunderman is often referred to as the
introduced toll-free 1-800 number father of contemporary direct marketing; among other
innovations he s and loyalty programs. And, in 1967, in a speech at MIT, he first coined
the term “direct marketing”.
● He started a small agency – Wunderman, Ricotta & Kline with his brother and two
colleagues. They set up shop in a New York hotel and got to work. Despite having
literally zero clients initially they managed to pick up $2 million in billings in their first
year. The direct marketing approach was now a proven success.
● The first 1-800 number was used in a Toyota campaign, and it was American Express that
took on the first ever loyalty program, helping them grow into the business behemoth they
are today.

The Rise Of Telemarketing -

● In the late 70’s a new marketing tool was born. It rode in on the back of the Bell System,
which provided telephone services to much of the United States and Canada from 1877 to
1984.
● During the 19th century the role of telephonists, or switchboard operators, became a
popular job for women. It was the first sector of industry to employ predominantly
females.
● Today, telemarketing is generally a unisex affair and used widely across all sectors. Like
all the marketing methods throughout history, it has seen massive improvements thanks to
technology and, of course, the experience of ages. It mixes modern technological
advancements in systems, data collation and telephony campaigns to impressive effect.
One of the most flexible and measurable channels, it combines human engagement with a
direct, data-led approach that brings a solid return on investment.

❖ Direct marketing then and now:

● The term “direct marketing” originated as a means of distinguishing marketing methods
that provide customers a way to respond from those that didn’t. For example, many direct

5
●

mail packages would include a message with a direct call to action to make a purchase
and a reply envelope to do so right away.
● This contrasted with television or radio advertisements often containing more general
messages meant to improve awareness of a brand or service.
● Call to Action: Every high-performing direct response campaign should have a clear call
to action that prompts recipients to convert. The path should be straightforward and result
in an action that drives a measurable business outcome.
The difference between these marketing channels was typically characterized by the
ability to measure results or impact. For example, if you sent 1,000 direct response mail
packages and received 100 responses with orders for a product, you’d know you achieved
a 10% response rate and could calculate a specific return on investment. On the other
hand, even if 1,000 people heard a radio advertisement and 100 went to a store to
purchase a product as a result, it would be very hard to measure the exact impact of that
specific campaign.
● This high degree of measurability enabled marketers to test and optimize campaigns as
well, which made direct marketing more popular. Instead of creating entirely new
concepts for each campaign, it was possible to change one small element, such as a
picture, color, or snippet of copy, and see the direct impact on profitability. This often-
made direct marketing a better investment over time, and helped it take off as a practice.
● Fast forward to the present day, and marketing has evolved, with many marketing
channels offering detailed ways to measure responses.
● Other types of online marketing fall somewhere on the spectrum of direct marketing,
based on their varying response options. For example, Google or Facebook ads typically
take users to a landing page or online store before prompting them to purchase anything,
so there is a layer of insulation between users and the response.
● However, these methods are highly trackable, and often drive immediate response
through the landing pages. Similarly, emails and texts are often held up as examples of
modern-day direct marketing, but these also send users to a landing page.

6
 ●

● Each of these modern platforms or developments have made the exact definition of direct
marketing a bit more ambiguous. As a rule, it’s safe to refer to any media that has an
immediate call to action, a clear path to conversion, and a way to track revenue, as direct
marketing

❖ Evolution of Direct Marketing -

What is Direct Marketing ?

● Direct marketing is a form of marketing that attempts to send its messages directly to
consumers, without the use of intervening media.
● It differs from regular advertising in that it does not place its messages on a third-party
medium such as a billboard or a radio commercial would.
● Today Direct Marketing plays a broader role, that of building a long-term relationship
with the customer such as :
● Birthday cards (e.g., Kesari Tours),
● Information material (e.g., Tata Telecom)
● Small premiums (e.g., Reader’s Digest) to selected members of their customer base.
● Airlines, Hotels, and a number of other businesses build strong customer relationships
through frequency award programs and club programs

Direct marketing is now a key discipline within marketing -

7
 ●

● Direct because its communications go directly between you and your cus tomer, with no
intermediary.
● Marketing, because it helps you meet your customers' needs and your profit, sales or
other objectives
● A discipline, because by following a set of rules and procedures, you can achieve good
results.
Targeted - reaching the customer in a manner appropriate for them to be prompted to
respond
● Direct - the communications go directly between yourself and the customer with no
intermediary. Customers can generally feel, touch, see or hear your communication to
them as individuals.
● Marketing - it helps meet your customers' needs and your profit, sales and other

objectives. Direct marketing is very much part of mainstream marketing It has three

characteristics :

1. Direct Response and interactive

2. Measurable
3. Build and maintain a database of customers and prospects

Direct responses and interactive -

● Communications sent to invite cus tomers to respond - by mail, telephone, Internet,

redeemable retail vouchers, etc
● The response may range from enquiry and giving information to ordering.
● This opportunity for monitoring feedback is critical to direct marketing.
● This is the distinguishing feature of direct marketing. Interactive means two-way,
individual communication between marketer and consumer/prospect (one-on-one). For
example, a direct response television advertisement selling exercise equipment lists a
tollfree number to call, to enquire or order the product. This requires the prospect to do

8
 ●

something and communicate with the marketer. Compare this to an advertisement for
Coca Cola on TV which is targeted at a wide audience and requires no action by the
viewer.
Measurable -

● Measured, evaluated and analyzed.

● Any medium - telephone, mail, Internet hits, etc. Measuring responses leads to
accountability.
● All costs can be related to response
● ROI can be calculated
● Advertising response is measured by market research methodology
● While direct marketers use transaction data to measure
● This is one reason why direct marketing has been called scientific advertising
● As direct marketing involves establishing an individual relationship with a customer,
individual responses can be measured. Most aspects of direct marketing are measurable,
which means direct marketing is accountable. For example, if we are selling exercise
equipment on TV using direct response advertising, respondents are asked to order the
product over the phone. As a result, total number of orders and inquiries can be directly
measured as a result of viewing that particular TV advertisement. Compare this to an
awareness advertisement for Coca-Cola. The local corner store selling Coca-Cola cannot
directly relate a sale of Coca-Cola to a customer viewing the television commercial

To build and maintain a database of customers and prospects -

● This gives you better understanding of your market and can give you competitive
advantage.
● Because direct marketing responses are individual, they can be compiled together with
information and put into a database and used again.

9
 ●

● For example, if a business has a customer database, they will know who their best
customers are, what they buy and how often; they can then target appropriate products
and services to these customers
● Direct marketing can take many forms, for example:
● Responding to a catalogue placed in your letterbox
● Placing an order for a book or DVD promoted over the internet
● Responding to a direct response TV commercial
Providing an 1-800 toll free number for ordering an advertised product
● Taking orders for a home delivery pizza over the phone or by fax
● Ordering a product or service on-line
Definition -

● Direct marketing is an interactive marketing system that uses one or more advertising
media to affect a measurable response & / or transaction at any location.
● Direct marketing is the planned implementation, recording, analysis and tracking of
customers' direct response behavior over time to derive future marketing strategies, for
developing long-term customer loyalty and ensuring continued business growth.
● Direct marketing is any activity that creates and exploits a direct relationship between a
firm and its individual customer.
● The interactive use of advertising media to stimulate an (immediate) behavior
modification in such a way that this behavior can be tracked, recorded, analyzed and
stored on a database for future retrieval and use.
● Any Promotional activity that creates and exploits a direct relationship between an
organization and its prospect and / or customer as an individual.
● Selling via a promotion delivered individually to the prospective customer

3 Key Elements -

● Interactive system: - There is a 2-way communication between the marketer and his/her
target market. The response or non-response of the customer completes the

10
 ●

communication loop in DM process, e.g. the customer will fill in the response coupon &
mail it.
● Measurability of response: - The number of coupons indicates the response rate to
marketer’s communication.
● Direct Marketing activities are not location specific: - It is not necessary for the marketer
to interact physically with the customer. He / She can establish contact through mail,
phone, fax, or Internet
Meaning and Introduction to Marketing, Evolution of Direct Marketing -

Good Marketing is No Accident -

Starbucks plans to ensure its marketing
successes in countries around the world

What is marketing?

● Marketing is an organizational function and a set

of processes for creating, communicating, and
delivering value to customers and for
managing
customer relationships in ways that benefit the
organization and its
stakeholders.

● “There will always be a need for some selling. But the aim of marketing is to make
selling superfluous. The aim of marketing is to know and understand the customer so well
that the product or service fits him and sells itself. Ideally, marketing should result in a
customer who is ready to buy. All that should be needed is to make the product or service
available.” ● Peter Drucker.

What is marketed?

● Marketing concept:

11
 ●

● Five core concepts

- Needs, wants, demands
- Products and services
- Value, satisfaction, quality
- Exchanges, transactions, relationships- of goods and money
- Markets- where buyers and sellers meet

Successful New Product Launches Require

Careful Planning

12
A Simple Marketing System

Key Customer Markets -

Evolution of marketing ?

13
● The marketing philosophy has undergone a thorough and gradual change since the great
Industrial Revolution that took place during the latter-half of the 18th and first-half of the
19th centuries.
This gradual change can be traced under four periods and captions namely, production
orientation period, sales-orientation period, customer-orientation period and social
orientation period.

1. Production Orientation Philosophy: Till 1930s, there prevailed a strong feeling that
whenever a firm has a good product, it results in automatic consumer response and that
needed little or no promotional efforts. This production-oriented marketing concept was
built on “Good wine needs no push.” That is, if the product is good and the price is
reasonable, there is no need for special marketing efforts.
2. Sales Orientation Philosophy: The failures of the production orientation philosophy of
1930s paved the way for change in the outlook that was possible during 1940s. It states
that mere making available the best product is not enough; it is futile unless the firm
resorts to aggressive salesmanship. Effective sales-promotion, advertising and
publicrelations are of top importance. High pressure salesmanship and heavy doses of
advertising are a must to move the products of the firm.
3. Customer Orientation Philosophy: This philosophy was brought into play during 1950s
and points out that the task of business undertaking is to study and understand the needs,
wants, desires and values of potential consumers and produce the goods in the light of
these findings so that consumer specifications are met totally. Here, the starting point is
the customer rather than the product. The enterprise is to commence with the consumer
and end with the requisite product. It emphasizes the role of marketing research well
before the product is made available in the marketplace.
4. Social Orientation Philosophy: There has been a further refinement in the marketing
concept particularly during 1970s and 1980s. Accordingly, the new concept goes beyond

14
 understanding the consumer needs and matching the products accordingly. This
philosophy cares for not only consumer satisfaction but for consumer welfare or social
welfare. Such social welfare speaks of pollution-free environment and quality of human
life.
4 p’s of marketing mix -

History of Marketing -

● What is marketing exactly marketing can be explained using the four P’s.
● Product which is good such as a car or a service such as a web design
● Place or distribution is where the manufacturer intends to sell their product.
● Price the marketer must determine the price at which the product will be sold that in.
● Promotion is either a discount or advertisement of the product so worded marketing begin

15
● Marketing began back around 15,000 years ago with the beginning of trade people did not have
all the netic technologies that we have today but they were still able to market their products and
because of trade consumerism is what it is today.
● People have products such as spices and material. They were surprised even if it was training
their products for other goods promotions was word-of-mouth in place was usually had a trading
post.
Although marketing was not an acknowledged study until the 1900s it played an important
role throughout history

16
●
In 1450 Johannes Gutenberg invented the printing press allowing mass production of
marketing and advertising materials which enabled people to spread news about their
business throughout their cities by the masses which is why Gutenberg is considered by
many the king of mass communication.
● In 1836 the first paid advertisement was released this is what started all the newspaper
and magazine ads that we see today.
● So you thought spam was new to the Internet age think again people used to use
Telegraph to send spam.
● The earliest recorded Telegraph spam was in 1864 so much for the good old days
without spam huh
● Once we get into the 1900s it's all technical information that will bore you to the bones
so let's try and make it simple
● In the 1990s the CRM was developed which allowed all the Adams soul to be tracked
and used to determine how good a product sells this became essential to marketing and
market research.
● And what about marketing today well business of dollars are spent on marketing and
advertising every year
● Marketing plays a major part in business and without it mass consumerism wouldn't be
what it is today
● Nor what goods and services be as cheap and available
● Therefore marketing is essential to any business but marketing agencies target large
corporations with a large corporations budget
● In other words they charge an arm and a leg to help advertise your products and services
● The downfall small businesses need all of their arms and legs for their business to
survive ● So what is the future for marketing well marketing isn't going anywhere but

17
●
the next step is to find affordable marketing so that small businesses can survive in a
world with big corporations
● So how does singling Marketing Group LLC fit into all this
Let's eat lean we believe in making it easy for small businesses to advertise their products
and services therefore we have developed a strategy to help market and advertise for
small businesses
A history of marketing marketing is all about persuasion and cross channel marketing is
also about persuasion.
● And using the right message and delivery method at just the right time.
● For a better understanding of how it works let's look back, to the beginning cavemen use
charcoal drawings telling others about stuff like dinosaur rocks, fire demonstrations and
creating the wheel, the problem messages weren't portable, you had to be there.
● Fast forward a few thousand years the invention of the printing press, marketing's first
big break the problem much of the target market couldn't read greatly limiting the
market.
● Next was the electromagnetic Telegraph, circa 1840, Wang Samuel Morse includes the
Machine and created his own language words on one end came out far away the problem
only a few people could understand what came out on the other end on the birth of the
geek.
● The 1950s and 60s, the telephone came on the scene and mass marketing was finally
here, the problem everyone got interrupted at with important messages about selling and
buying swampland in Arizona, radio, television, Direct Mail, coupon book, flyers
posters, billboards, door-to-door Sales, remember the Fuller Brush man were
bombarding the consumer at the same time the problem just that they got bombarded.
● The Golden Age of marketing and data mining has arrived, Al Gore invents the Internet
then came websites, blogging, article marketing, email, social media, SEO, pay per click,
●

18
●
pay per impression and the problems number one - email started out fun until they
invented spam and number two - all this activity created data lots of it but no one knew
what to do with it
● Finally cross marketing and data mining arrived, understanding what the data reveals the
society itself now understanding it at long last brings us to our topic
● Data mining is gathering a pertinent information to unlock the secrets of each
individual's likes and dislikes, preferences.
● The standard property provides advantages for the marketer to tailor the message and the
delivery vehicle when the prospect is most ready to purchase
Cross channel marketing is about knowing your target audiences preferences so you can
deliver the right message on the right platform at the right time ,the advantage - it
streamlines the process minimizes cost and improves conversion rates.
People are not burdened with sorting out all of the information they receive.
● People making bird sounds tweeting whether online face in a book they might dig social
media and even be linked in to their favorite business discussions.
● Then there are those who haven't gotten out of the quill and ink pot stage each prefers
one or two methods the advantage - there are platforms to send messages suitable for
everyone
● Direct marketing with the use of data mining can home in on exactly whom you wish to
contact, data tells us their likes and their dislikes their age, gender, and a boatload of
other useful information the advantage - the Direct Marketing Association boasts a
favorable response rate in excess of 6%.
● Cross channel marketing is the use of the data collected to custom tailor a campaign for
segmented audiences in their preferred method of communication the advantage
conversion rates escalate and costs are minimized returning a much higher ROI.

19
●
● Example, your company website, email campaigns, articles and blogs all speak of a
quote unquote special offer social media, direct mail and display ads are also used with
billboards
and news ads the marketing message will reach beyond the targeted lists capturing even
more prospects for potential conversion
● Mobile marketing can also be part of the campaign using SMS texting or mobile ads all
or some of these methods are coordinated for maximum exposure, your data will tell you
which marketing delivery vehicles to deploy the advantage - not a single platform can
produce a results as coordinated cross channel campaign will generate nor can any one
channel provide the consistency of messaging and the frequency needed to generate
action.

20
 ❖ Introduction to marketing mix -

Four elements of marketing mix -

1. Product
2. Place
3. Promotion
4. Price

Fifth ‘P’ of marketing is: 5. Packaging

❖ Features of marketing mix -

1. The four elements of marketing mix are co-equal, interdependent, and essential. Eg.,
Depends upon the product the other three factors will change.
2. Marketing mix is very useful in achieving the marketing objectives, i.e., sales, profit and
customer satisfaction.
3. Marketing mix is a flexible and dynamic concept. The components could be adjusted to
meet the competition in the dynamic market environment. Eg., Nirma washing powder
packed in a pouch and sealed at the top without sophisticated packaging has been well
accepted in rural areas even in the face of intense MNC competition.
4. Marketing manager acts as mixer of all marketing ingredients, and he must use his
knowledge, skills and experience in developing optimum marketing mix.
5. The concept of marketing mix is applicable to business/ profit and non-business/ non-profit
organization.
6. A thorough understanding of the customer is common to all the four elements. The focus
points of marketing mix is the customer, and the marketing mix is expected to provide
maximum customer satisfaction. e.g., in the case of products like water purifiers,
computers, etc. after sales service plays an Important role in customer satisfaction.

❖ Aspects of marketing mix -

They are broadly divided into two:

A. The markets

21
B. The products
● Markets: The business is affected due to
economic, social and political environment
which is beyond the control of the management.
So, the company must formulate its policies
according to business environment. The forces
could be:
1. The policies of the govt. regarding oil, direct and indirect taxes, foreign exchange, etc.,
are to be considered while finalizing marketing program. E.g., Tesla was not ready to
come in
Indian markets because of Foreign policies of India. In the year of 1976-77 Coca-
Cola left Indian market due to Indian policies.
2. Consumer behavior is affected by number of factors: education, income, beliefs, age
group, industrialization, occupation, attitude, beliefs, values, customs etc., affect the
demand for the product.
3. Competition affect both the demand and prices of the product and the marketing manager
must prepare the marketing mix to meet the competition. E.g., if one brand lowers the
prices the other brand also feels the pressure of lowering the price. Amazon gives
discounts during Indian festivals.
4. Trade factors such as channels of distribution, trade practices, the motives and
assumptions of the distributors, service provided by the intermediaries etc., requires
careful examination while developing marketing mix. E.g., Tupperware’s distribution
happens through agents.
Amazon has distributors and warehouses.

22
 ● Factors related to
products:
1. Product planning: provide product or service to the
product includes type, quality, and design of the product. Coca-Cola has different products
in different countries.
2. Branding: Must take decision regarding the branding policies, branding promotions, and
trademarks
3. Packaging: management must decide about type, quality and design of packaging. E.g.,
Milkmaid’s packaging helps to sell more products and gave recipe to make
desserts.
4. Distribution: channel of distribution, physical movement of stocks, financing etc.
5. Personal selling: activities will have an impact on the formulation of marketing mix. E.g.,
Eureka Forbes still uses personal selling as one of the methods of marketing.
6. Advertising: strategy, media, methods, cost, etc., It is the costliest marketing method.
7. Sales promotions: sales promotion includes activities such as demonstrations, displays,
dealer programs, that stimulates purchases by consumers.
8. Marketing research: involves systematic gathering, recording and analyzing of data about
problems connected with product, pricing, and distributing.

23
❖
●
4 p’s of marketing mix -
In the 1950s Neil Borden popularised the term marketing mix which contained more than
ten elements of marketing. The fundamental among them was the 4 Ps of marketing. The
very purpose of marketing is to make your promising customers aware of your products.
A marketing mix is the set of those factors which a company can leverage to make the
consumer purchase its products.
● Marketing mix usually refers to the set of 4Ps viz. Product, price, Promotion, Place. But
theoretically, the marketing mix is a much broader term.
❖ Product :
● A product is the heart of the marketing mix. All marketing activities begin with the product.
The product is not a physical entity alone; it captures the whole tangible and intangible
aspects like services, personality, organization, and ideas.
● Without a product, we have nothing to price, promote or place. Hence, of all the 4 Ps the
Product is the most important element.
● Here, it is essential to understand the term product mix concerning marketing. The product
mix is the whole range of products a company offers to its customers. The decisions
regarding product mix will depend on many factors like:
● Design, Features, Brand name, Product variety, Quality, Services, Packaging, and returns,
etc. Examples:

Price :

24
❖
●
Price is the monetary value that has to be paid by a customer to acquire or own the product
of a company. It is the critical revenue-generating component of the firm.
● Pricing decisions should be taken with great care, as it is a double-edged sword. If your
product is priced too high, it may convey a feeling of high quality or overpriced. At the
same time if the price is low, it may send a message that your product is cheap and not of
good quality. If it is high priced it will make your product placing to limited and standard
stores. So the marketer must know the art of wielding this dangerous sword of pricing.
● The pricing mix decisions need to consider the below marketing variables: Methods of
pricing are:
- Allowances to wholesalers, retailers, (promotional or end of season) Discounts, agents
(Tupperware)
- The pricing strategy of your organization must align with the overall goal of your
organization to blend smoothly. Examples -

25
❖
●

Promotion:
It aims to serve two objectives.
● One, it informs the potential customers about your product and secondly, it persuades them
to buy your product.
● The promotion mix will thus include the various means that you can use to communicate
with the target audience.
● An effective promotion mix will ensure good sales and a marketer must strive to create a
conducive environment.
● The main elements of a promotion mix are:
● Advertising, Personal selling, public relations, Direct marketing, Publicity -social media,
print, etc., Sales promotion

26
❖
●
● Eg. - Shopify understands that many of its prospective users have never considered
monetizing their hobby or craft products or opening their own ecommerce store. However,
that is precisely what makes this ad so compelling. Shopify knows its audience, and so
goes after first-time ecommerce craft retailers with this tempting positioning
● Imagine it – someone who’s been making scarves for years, whose family and friends are
always telling them, “You should sell these! sees this ad. They reflect for a moment,
before thinking, “Y’know what? I should sell my scarves!” At this point, they have already
bought into Shopify’s message, and may begin exploring getting started with the platform.

Place:
Place or physical distribution deals with the transfer of ownership of the product from the
manufacturer to the customer.
● The margin of your profit depends on how quickly you can turn over the goods. The more
swiftly the products reach the higher sale, the more likely are the chances of satisfying the
customers and increase brand loyalty. Hence the Place factor is crucial in ensuring your
product’s competitiveness in the market.

27
❖
●
● The following are the elements of a distribution mix:
● Channels of distribution (wholesaler, retailers), Transport, Order
processing, Coveragerural or urban market

❖ Marketing Plan -
1. Situation analysis covers external and internal factors including competition analysis.
2. Marketing objectives to match the marketing opportunities in a competitive
marketing.
3. Marketing strategy providing market segmentation and marketing mix involving
product, price, promotion and place.
4. Implementing marketing plans.
5. Monitoring marketing plans to achieve accomplishment of marketing objective and
results in terms of customer satisfaction and profits.

28
❖

Marketing Planning Process - 1.

Analysis of marketing situation
2. Marketing objective
3. Marketing Strategy (4P’s)
4. Developing and implementing marketing plans and policies
5. Monitoring the marketing plans
a. Customer satisfaction
b. Profitability
c. Market share
d. Survival
e. Company Image

❖ Direct Marketing Techniques ● Direct

Mail
● Telemarketing
● Direct Selling (Face to Face Selling)
● Email Marketing and Internet
● Catalogs

❖ Direct Mail -
● Direct mail is method of Direct Marketing in which advertisers mail printed
advertisements, letters or brochures, pamphlets, catalogs, free trial CDs etc to large
groups of consumers.
● The term "direct mail" is used to refer to communications sent to potential customers via
the postal service and other delivery services.
● Direct mail is sent to customers based on criteria such as age, income, location,
profession, buying pattern, etc.
● Bulk-mail or Mass mail is used to lower the cost of the mailing, and targeted mailing lists
are used to maximize potential response.

29
❖●
● Advertisers find direct mail appealing for a number of reasons. It takes their message
directly to the consumer.
● While consumers might walk away from a television advertisement or flip past a
newspaper advertisement, they do check their mails.
● Advertisers also like that they can direct their message as narrowly or broadly as they
want.
By receiving the mail at home, direct mail puts the advertiser's message in the hands of
the consumer at the time the consumer might be likely to read it, along with the rest of the
mail. Telemarketing -
● Telemarketing is method of marketing a product/service over the telephone.
● Most telemarketing calls are "cold calls," meaning the recipient of the call has not
requested that the telemarketer contact them.
● Telemarketing is one of the most controversial types of marketing.
● The most successful telemarketing service providers focus on generating more
"qualified" leads that have a higher probability of getting converted into actual sales

❖ DO-NOT-CALL REGISTRY Service, India

● The Telecom Regulatory Authority of India had announced the Do-Not-Call Registry in
India in 2007. As per TRAI’s guidelines, primary objective of the National
● Do Not Call Registry (NDNC Registry) is to curb Unsolicited Commercial
Communication (UCC). UCC has been defined as “any message, through
telecommunications service, which is transmitted for the purpose of informing about,or
soliciting or promoting any commercial transaction in relation to goods, investments or
services which a subscriber opts not to receive”
● In the next phase of implementation, tele marketing companies will have to get their
calling list scrubbed through the NDNC module; and telemarketers will be able to call
only those numbers which are cleared by the NDNC registry.
● Surprisingly, within 5 days of launch, 14,750 telemarketers having around 4,50,000
telephone lines have put in their applications for registering with the Government to
comply with the National Do-Not-Call (NDNC) Registry guidelines.

❖ Direct Selling (Face to Face Selling)

30
❖
●

● Direct selling is a channel of distribution for the marketing of products and services
directly to consumers.
● Direct sellers are not employees of the company.
● They are independent contractors who market and sell the products or services of a
company in return for a commission on those sales.
Examples of direct selling include categories like cosmetics (Avon, Amway, Oriflame),
Wellness products (Amway), clothing, etc.
● Eureka Forbes had made history in India by successfully marketing their vacuum cleaners
through door-to door selling.
Email Marketing and Internet -
● Email marketing is a method of direct marketing which uses electronic mail (email) as a
means of communicating advertising messages to their audience.
● It refers to the promotional mails to new or existing customers by sending direct emails or
newsletters.
● It is widely used as it is much more cost effective than most other forms of
communication.
● A tool for building relationships with both existing and potential customers.
● A practical, low-cost marketing tool that combines convenience with technology.
● It provides small business owners with the ability to reach more customers, which in turn
can result in increased sales.
● Most business owners today use email marketing campaigns to promote all sorts of
services and products, from babysitting services to mobile phones and beyond.

❖ Catalogs
● Catalog marketing is a direct selling method in which
products from several marketers, or several products
from the same seller, are presented to prospective
buyers via mail or internet
● A catalog is usually self expressive, giving details of the
product like the color, the size, the shape, the price, the

31
 ❖●
applicability etc.- the brand image and other related facets are critically and
logically analyzed.
● Big retail outlets like Hypercity, Big Bazaar, Croma etc. extensively use catalog
marketing to share information about their products.
● Catalog marketing is a specialized branch of direct marketing.
● The two disciplines share many of the same characteristics.
Like direct marketing, catalog marketing is based on
interactivity, or one-to-one communication between the
marketer and the prospect or customer.
● Catalogs always include response devices,
and catalogers can measure the response to any and
every mailing they make.
● It is safe to say that most at-home shopping takes place
through catalogs.
Types of Catalogues -

The three major categories of catalogs are business-to-

business catalogs,
consumer catalogs, and catalog
showrooms

● Business-to-business
● Consumer catalogues
● Showroom Catalogues

❖ Business-to-business catalogs -
● Business-to-business catalogues are those that
provide merchandise to be used
during business, including everything
from office supplies to computers
● In industrial settings business-to-business catalogues are used to sell everything from
heavy machinery to hand tools. ● Business-to-
business catalogues are mailed to individuals at

32
❖
●

their place of business, with most purchases being made on behalf of the business
rather than the individual.

❖ Consumer catalogs -

Consumer catalogues are mailed to consumers at home. In her book on catalogue

marketing, Katie Muldoon identified eight types of consumer catalogues.
● Unaffiliated catalogues are stand-alone ventures whose primary purpose is to sell
merchandise by mail.
● These independent cataloguers are not affiliated with any retailer or
manufacturer.
● While the stores of unaffiliated cataloguers were originally designed to sell only
remaindered and unsold merchandise, some successful independent cataloguers
have opened their own retail outlets to take advantage of the consumer
recognition their catalogues have built
Catalog showrooms -
● Catalog showrooms are a category of consumer
catalogers who combine retail marketing with
catalog marketing. A catalog showroom is
essentially a retail outlet.
● The catalog, usually quite large, serves primarily
to build traffic in the showroom.
● The trend in catalog showrooms has been to
deemphasize the mail-order aspect of the catalog
and present the showroom as a retail outlet with
the added benefit of being able to place catalog
orders from the showroom.

❖ Kiosk Marketing -

33
❖●
● The word kiosk was originally taken into English
from Turkish, in which its source köşk meant
"pavilion."
● A kiosk is a small booth like structure used to
showcase products or services to customers.
● They are mainly used for promotion of a product or
service. It has been used widely by players in retail,
tourism and insurance industry.
● Indian Railways make information access easier for
their customers by use of Interactive kiosks placed
at all their railway stations.

34
❖

35
The principles of Direct marketing: Chapter 1

Q1. Define Marketing and explain the marketing mix.

The American Marketing Association defines Marketing as “the process of planning and executing
the conception, pricing, promotion, and distribution of ideas, goods, and services to create
exchanges that satisfy individual and organizational goals”.

‘Marketing is the societal process by which individuals and groups obtain what they need and
want through creating, offering and freely exchanging products of value with others.’ This
philosophy is the same for direct marketing. So where does direct marketing differ from general
marketing?

Direct marketing is a method of marketing based on individual customer records held on a

database. These records are the basis for marketing analysis, planning, implementation of
programs, and control of all this activity.

In contrast, general marketing is structured around the creation of brands for each product, and
the attainment of market share for that product. The very first marketing department, set up
by Colgate Palmolive in 1938, contained that classical department structure: brand and product
managers, group product managers, and so on.

In comparing these two approaches, the advantage of the direct marketing framework is that ‘the
use of the database forces a natural focus on customers rather than products. Modern direct
marketing thinking, for example the Institute of Direct and Digital Marketing (IDM, 2012) holds
that it is better to understand one’s customers as ‘individuals’ in more detail than to build up
product brands. Direct marketing also encourages us to think in terms of customer relationship
with the company – are we talking to ‘new prospects’ or ‘loyal, established customers? In this
respect, there is a natural alignment between direct marketing and ‘relationship marketing.

The marketing mix framework was extensively used to support the Marketing concept of the
1950s. The ingredients of the marketing mix are as follows:

a) Product

b) Price

c) Place
36
 d) Promotion
e) People

f) Process

g) Physical evidence

A. Product: A product is an item that is built or produced to satisfy the needs of a certain
group of people. The product can be intangible or tangible as it can be in the form of
services or goods.
B. Price: The price of the product is basically the amount that a customer pays to enjoy it.
One of the main tenets of the marketing concept is that customers are usually happy to
pay a little more for something that works really well for them.
C. Place: Refers to how the product gets to the customer; for example, point of sale
placement or retailing. It refers referring to the channel by which a product or service is
sold.
D. Promotion is a very important component of marketing as it can boost brand recognition
and sales. Promotion is comprised of various elements such as advertising, sales
promotion, publicity, and personal selling, branding and refers to the various methods of
promoting the product, brand, or company.

The additional three P’s are

E. People are the human factor (employees) that are critical to the marketing of services. An
essential ingredient to any service provision is the use of appropriate staff and people.
F. Process: Refers to the systems used to assist the organization in delivering the service.
G. Physical Evidence: Where Physical Evidence is the element of the service mix which
allows the consumer again to make judgments on the organization.
Q. 2. How does direct marketing differ from retail and mass marketing?

Using the four Ps of marketing—product, price, promotion, and place or distribution—we

can compare direct marketing with mass-market retailing.

Marketing component Direct marketing Mass-market retailing

37
Product Packaging does not need to Packaging needs to stand
out on a retail shelf. Most
stand out on a retail shelf. products and services are
suitable.
Technical products,

products needing

demonstration or

impulse goods are

unsuitable

Price Price needs to cover product, Price is usually competitive.

order generation, shipping Consumer price considers
and handling, and profit. wholesale and retail mark-
The price must be up (allowances to be given
competitive. to supply chain)

Promotion

Promotion is designed to get

an order or request for Promotion is via mass
information.
media to create awareness,
Communication is individual plus point-of-sale
(one-on-one). promotions in-store. No
oneon-one communication
Often free trial or free between consumer and
samples may be offered. national advertiser.

38
Place Distribution is direct to the Intensive distribution targets
consumer. The marketer the entire market
goes directly to the buyer
with an offer via TV, mail,
print, catalogue, telephone,
or internet

Q 3) Explain Traditional marketing vs modern marketing techniques.

With the advent of new technology and globalization, there is a constant change happening
worldwide marketing is also undergoing a whirlwind of change. New techniques of marketing
such as e-marketing and online marketing have evolved.

The traditional marketing techniques’ intent is only to increase the visibility of the company
and its brand. It uses its Unique Selling Proposition to market its products Earlier it was possible
to use USP which was exclusive to a particular product from a particular brand as there were
fewer competitors but today all the features of a brand are already there with the competitors.

Traditional marketing is also an umbrella term that covers the wide array of advertising
channels we see daily. These may include print media, billboard and TV advertising, flyer, trade
shows, exhibitions, radio, and poster campaigns.

Traditional marketing is expensive, and even the simplest radio or print or TV ad costs a lot of
money, especially if you want to be seen or heard by a lot of people. It can be quite difficult to
properly target your audience. This is usually done by placing the ad during the airtime of those
shows that your target consumers are most likely watching, a lot of people will not be interested
in watching – which is wasted money.

The latest trend in marketing is Modern marketing techniques. It works on the principle of
highly targeted advertising which can bring more benefits for smaller amounts of money
invested.

39
For a laundry service that has an emphasis on removing heavy stains and quality service, this
direct mail campaign gave the receiver a chance to throw a tomato at the target and then watch as
the target reforms whilst simulating stain removal for the laundry service.

Modern marketing techniques are Viral marketing, social media, Search engine optimization,
Mobile marketing, and e-mail marketing. Today brands are using AI in marketing their products.

Give people a good reason

to engage with your emails
or social media. Well, as
Starbucks does. They know
how to make you buy that
half-off Frappuccino!

Most brands focus on social

media networks such as
Facebook, Twitter,
Instagram, and YouTube,
where brands can easily find
the desired customer and
present what it has to offer
almost free of charge.

This is all enabled by the

vast amount of data about
each user available to these
networks, and the brand will
need to buy sponsored ads
and get the chance to
carefully select when and
who will see their ads. Furthermore, feedback can be instantly received, and brands can
freely engage their users and gather all the information that can help them in the future.
This piece from BMW had
customers cutting a path
through a wintery postcard
to emphasize the reliability
and control of their snow
tires. Their combination of
an envelope and mailer is
great creative thinking.

40
 Direct marketing can help you sell inexpensive as well as expensive products. Initially,
marketers thought direct marketing is meant only for cheap or inexpensive products. But very
soon the thought was changed due to one incident. In 1986 a brand – Comp-U-Card – sent out a
mailing in conjunction with the Automobile Association offering discounts on motorcars. Two of
the respondents purchased £87,000 Bentley Mulsanne Turbos. In the same year, Ogilvy &
Mather Direct was able to help Pepsi Cola increase distribution and sales, largely by using
mailings. In both cases, the brand is an important element.

Chapter 2 -Direct Marketing.

The American Marketing Association defines Marketing as “the process of planning and
executing the conception, pricing, promotion, and distribution of ideas, goods, and services to
create exchanges that satisfy individual and organizational goals”.

❖ Approaches of Direct marketing

The three approaches of Direct marketing are:

41
1. Stand-Alone Direct Marketing - This could be regarded as the “ultimate" Direct
marketing approach. Organizations that employ this type of approach employ no other
means to manage the relationship with their customers. Here the customers are directly
recruited via direct response press advertising, direct mail, or the internet. Thereafter, the
relationship is managed using a combination of telephone, mail, e-mail etc. Companies
like Flipkart.com, Insurance, mutual funds etc
2. Integrated Direct Marketing - In this
approach Direct Marketing is viewed as a part
of an integrated marketing mix. Organizations
such as 'Save the child', 'Readers Digest',
‘Pizza-Hut’ are seen to adopt this approach.
The challenge is to integrate direct mail,
catalog, telemarketing, website, email, SMS
with other marketing communication.
Integrated direct marketing is a type of
attention grabbing, response generating and
awareness increasing process which uses
multiple ways and channels to communicate to
the target audience. Companies use different
media channels for effective promotion of its products using integrated marketing
communications (IMC). Integrated Direct Marketing has a five-stage methodology:
1) The first process is like any other marketing and begins with understanding the customer
requirement.
2) Second step in integrated direct marketing involves the integration process where all the
available channel and resources are assimilated to deliver the message to the target
customer.
3) Third step involves building up the integrated marketing channel to provide significant
service to customers.
4) Fourth step involves the repetition of the above process to provide and communicate to
generate larger response.
5) Fifth step in integrated direct marketing require taking feedback from the service provider
and sales executive to improve upon the service.
3. Peripheral Direct Marketing

In this type of approach, Direct Marketing is employed as only an occasional, tactical

marketing tool. Here direct marketing could be initiated as a short-term response to
decreasing sales or competitive pressure e.g., Pedigree Petfood, etc.
Peripheral marketing, such as product placement or sponsorships, enables you to reach your
customers with understated yet successful messages, setting your company's products or
services apart from your competition. Hindustan Lever and many other FMCG companies
adopt this form.

42
 Influence: Celebrity spokespersons for products are one of the oldest types of peripheral
marketing. Oprah Winfrey took this to new heights with her lists of favorite things, which
catapulted some small companies to big fame. Companies try to persuade celebrities to wear
their clothes and jewelry or use their products. Even if the star never mentions the item by
name, if fans recognize the brand, they may seek out similar clothing or jewelry from the
maker.
Sponsorship is one form of peripheral marketing. You attend a concert or sporting event,
where banners with the names of the companies sponsoring the event flank the stage or
arena. You don't see a commercial -- a name or logo tells you the makers of this product
support a performer, team, or cause that you also support. The company is sending the subtle
message that it shares your interests and manufactures the product for you.
Advantages of Direct marketing -
1. Home shopping is fun, convenient & hassle free.
2. Saves time
3. Introduces customer to a large variety of products at a time.
4. Comparative shopping is possible by browsing through mail catalogues & online
shopping.
5. Customers can order goods for themselves & for others also.
6. Sellers also benefit, as they can personalize & customize messages.
7. Direct marketers can build a continuous relationship with each customer.
8. As direct marketing strategies can be timed to reach prospects at the right time &
moments, it receives a higher readership because it is sent to more interested prospects.
9. Direct marketing also makes the direct marketers’ offer & strategy less visible to
competitors.
10. Direct Marketers can measure the responses to their campaigns to decide which of them
have been more profitable.
11. Tracking performance allows direct marketing to analyze relationship between customer
characteristics & buyer behavior in their database
12. Direct Marketing activities have an advantage over general marketing activities in the
area of performance tracking.
13. 13. As there are no intermediaries there is an increase in profits
14. As there is precision targeting, Direct marketing activities are aimed at individuals. This
reduces the waste inherent in many other types of communications.
15. The prospect is encouraged to place an order or trust information more as he is calling a
number or sending a card

Disadvantages of Direct marketing -

1. Acquisition of data of individual customers may be difficult – Direct marketing is

effective only when all information about the individual customer is available. It may be

43
 difficult to acquire this data, as people would be reluctant to part with personal information.
2. The customers could be exposed to information overload – In today’s rich business and
personal environment everyone is bombarded with all types of data. People are overloaded
with too much of information resulting to spam mails .
3. Requires highly skilled staff to analyze each customer profile – In Direct marketing
communications should be properly done such as title, role etc. Also it is important to
maintain customer profile accurately which is only possible by employing skilled staff
4. Customer Service rather than customer loyalty is more important in direct marketing
Decision variables in Direct marketing - For Direct Marketing, the following variables
are associated with making program decisions:

1. Offer
2. Creative
3. Media
4. Timing/sequencing
5. Customer service

● Offer: The ‘Offer’ is the complete proposition made to a prospective customer by the
firm selling the good or service. It includes the product or service, the positioning of the
product or service in terms of needs or benefits, the price of the offering, any risk-
reduction mechanisms such as money-back guarantee, or price refund or discounts
available to the buyer. E.g. Cadbury’s, following the success of Facebook’s personalized
video, Cadbury’s chose to create its own. But instead of giving consumers a look over
their past year with the brand, it spoke to customers’ personal tastes in chocolate. The
campaign, which ran in Australia, matched a Dairy Milk flavor to users based on
elements from their Facebook profile, including age, interest and location. Once the user
agreed to connect with the brand, a video utilizing their own content, including photos
and personal information, was automatically generated. The campaign obtained a 65%
click-through rate and a 33.6% conversation rate, proving the personal touch works.
● Creative: The creative component includes the copy platform, graphic design elements,
involvement techniques, and production considerations such as personalization.e.g. Jeep
Cherokee. Jeep’s global positioning is ‘adventure, freedom and passion anytime,
anywhere’ was looking for solution to
benefit from the remaining customer data
for the launch of the new Jeep Cherokee
model. To invite people to test drive they
prepared a kit which reflects the spirit of
Jeep. Various clues were given through the
kit to maintain the DNA of Jeep. A clock
for anytime and a compass for anywhere,

44
 and elements in nature for adventure, freedom and passion. 76% customers come to Jeep
for test drives.
Significant number of the customers’ claims for the preorder.
● Media: The media used by direct marketers include all those used by general marketers
as well as direct mail, telephone, and online services. Direct- response print & TV
advertising are particularly effective in generating responses to complex offers that
contain items that can be displayed visually.
Shakespeare’s classic drama, Macbeth, was brought into the modern world by The Theatre
Academy’s excellent direct mail marketing
campaign. Sending out paper
bags emblazoned with a huge M – in the
style of McDonald’s famous arches – the
company promoted the showing of
Macbeth. The fast food paper bags were
creative, innovative and shared across social
media. It was also a relatively cheap
example of a direct mail marketing
campaign, as they used efficiently produced paper bags.

● Timing/Sequencing: Timing & Sequencing of direct marketing communications

determine whether the product or service is offered once or as a part of a campaign, that
is, as one-shot message or as multiple messages. Also at issue is whether a campaign
should be on intermittently (pulsing) or continuously, as well as how often should the
communication be repeated. To encourage
children to take up athletics, Nike came up
with a cost-effective, yet memorable, direct
mail marketing campaign. Shoeboxes were
sent out to targeted customers, and the
limited edition boxes were designed to
resemble a stadium once opened. Not only
did they have the print of the stadium
inside,
but sound was produced when opened, allowing the recipients to hear the roar of the
crowds.

● Customer Service: Customer service is an important aspect of Direct Marketing. It leads

to strong customer franchise and loyalty. Satisfaction with service is a prime
consideration in customers’. e.g. Starbucks. Starbucks successfully keeps customers
engaged with its gamified mobile app. Integrating the brand’s rewards system with the
ability to customize and order drinks via the app, it makes use of information such as
purchase history and location to get as personal as possible. The introduction of the

45
 rewards system saw Starbucks’ revenue soaring to $2.56 billion, while the app has
generated around 6 million sales per month (around 22% of all U.S. sales).
Importance of direct marketing - Direct marketing is an interactive marketing system that uses
one or more advertising media to affect a measurable response & / or transaction at any location
.
1. Measurable: By using any of the direct marketing techniques like Telephone, Mail &
Internet, and the customer responses can be measured easily. Direct marketers use
transaction data to measure.

2. Direct Engagement with customers: Direct Marketing enables companies to target the
clear and well-defined target markets, thus ensuring a high rate of conversion from the
customers. To mark Earth Hour, the corporation produced one of the most creative direct
mail ideas in their history. To encourage companies and large businesses to follow suit
and switch off their lights, Earth Hour sent out
yellow candles in boxes to CEOs and industry
leaders. The front of the box was designed to
mirror the facade of the building, and pulling
the yellow candle out of the box resembled
‘switching off the lights’. Thanks to one of their
best direct mail campaigns, company support of
the ‘switch off’ went up by 260%.

3. Cost Effective: Direct Marketing is more cost effective as compared to other marketing
methods. The organization resources can be focused on more result-oriented markets. The
tools used for direct marketing cost less compared to other methods. For e.g., Email
marketing vs. buying a television slot.

4. Quick Responses: Direct marketing is quick and flexible in achieving results. This is
especially true for telemarketing, one of the direct marketing tools, as the results of a
conversation can be logged immediately, and scripts adjusted straight away to improve
results.
5. Better Customer Relations: Direct marketing is far more effective at initiating and
developing a meaningful dialogue with new customers. From the outset you have a direct
relationship with them, which can also be used as part of a push pull strategy to stimulate
demand for retailers.
6. Testing: Direct marketing allows marketers to test and arrive at the most successful
combination of direct marketing tools. Marketers can target a representative sample of the
target audience and see what delivers the best response rates before developing a full
campaign.

46
 7. Repeated Sales for existing customers: Direct Marketing helps companies to achieve
higher sales by making repeated sales to their existing customers. The information about
new products or services can be shared with existing customers via mediums like sms
(short messaging service) and emails, etc.

Principles of Direct Marketing

There are eight key principles of direct marketing & they are as follows:

1. Planning your marketing activity: All direct

marketing should form part of a controlled marketing
strategy, which has been produced because of market
and competitor analysis and in relation to achievable
objectives. e.g., Ikea side table If you’re looking for a
side table, then Ikea’s a pretty good place to start.
Especially when they offer innovative little ways to encourage you to buy their products.
Ikea’s Lack side
table is a budget affair, popular with people looking for an affordable and practical
option, however their promotion was any
2. Targeting your customer: Customer information should be stored and capable of
manipulation and retrieval from your customer database, to contact your existing
customers. Analysis of this also helps you to identify characteristics of potential future
customers. e.g. The famous ‘Share a Coke’ campaign, first launched in Australia in 2012,
still retains its title as one of the most original examples of personalized marketing to
date. The idea was to spread advocacy and love for the brand by replacing the soft drinks
logo with consumer names, encouraging people to share with friends and spread the
brand’s message using the hashtag #shareacoke. In the wake of the original campaign,
Coca Cola Co. saw a rise in sales for the first time in over a decade. A spokesperson from
Coca-Cola said: “This campaign taught us that personalization can only be highly

engaging and effective if it can be shared with a wide audience.”

3. Measuring your marketing activity: The results of direct marketing should be measured
to tell you what works and what does not.

47
 4. Tracking: This involves monitoring customers' responses over time, ideally for as long
as your relationship with them lasts. This enables you to measure their value and
understand how much of it is a result of how you marketed to them.
5. Customer behavior: Tracking the spending patterns and general behavior of your
customer can help you establish which products are popular and which are not. This can
help you determine future products and strategy.
6. Future strategies: One aim of marketing is to maximize the value of your customers. So,
the previous steps will ensure you have the information to plan effective and efficient
marketing to achieve this aim.
7. Developing long-term loyalty: By targeting the right customers, offering them what they
want and encouraging them to take more of your products, you will protect your customer
database. Your customers will be more likely to stay with you for longer.
8. Encouraging profitable business growth: Increasing the number of loyal and valuable
customers you have and limiting the number of customers with low value and/or high risk
to achieve the profitable growth of business. This increases turnover and profit, which can
be reinvested to ensure that service and product standards are maintained and ensure that
your customers stay happy

● Mass marketing vs one to one marketing : Mass marketing is where a firm tries to
satisfy entire market which is full of customers with different needs using a uniform
product offer. In mass marketing there is no segmentation involved and the firm believes
that all customers have similar needs and they can be satisfied with the generic product.
One to one marketing is where the firm offer customized solution by differentiation
customer needs and treats individual customers separately with different offers. This is a
modern customer relationship management practice where the firm analyses and
understand needs of each customer separately and offer customized solutions to satisfy
their varying needs.

MASS MARKETING ONE TO ONE MARKETING

48
Average customer Individual customer

Customer anonymity Customer profile

Standard product Customized market offerings

Mass production Customized production

Mass distribution Individualized distribution

Mass advertising Individualized messages

Mass promotion Individualized incentives

One-way communication Two-way communication

Economies of scale Economies of scope

Share of market Share of customers

All customers Profitable customers

Customer attraction Customer retention

Case study: RCI Financial Services – driving people to the portal.

RCI Financial Services – UK finance partner to Renault, Nissan, Infiniti, and Dacia – rolled out a
direct mail campaign in an effort to persuade more of its existing customers to register to its
49
online portal, where all their account information can be stored in one place, alongside FAQs and
offers. RCI called on the help of integrated marketing agency JJ Marketing to give its existing
customers a clear idea of the benefits of activating their online account and how they could go
about doing it. JJ Marketing sent a four-page brochure directly to RCI’s existing customers,
using creative and customer data in a way that made it very personal. It used customer name,
town and car make on the inside left cover, and displayed what customers could do after
activating their account on the inside right cover.

To persuade more people into activating their registration, JJ used a prize draw. The idea behind
this was if customers registered their
account, they would be automatically
entered into a prize draw to win £250
worth of IMO car wash vouchers. The
campaign was a big success, delivering a
significant number of registrations. Its
impact was measured by analyzing the
number of portal registrations following
the roll out of the DM, which was sent to
70,000 existing customers, achieving a
click-through-rate of 9.51%. The total
number of customers who activated their
online portal wasn’t far short of 7000 – a
conversion rate of 9.67%.

Objectives of Direct marketing - The following are some of the core objectives of direct
marketing:

1) To raise awareness: The primary objective of direct marketing is to raise awareness. The
increased awareness may well lead to a future sale when the prospect
or existing customer is in higher need of buying the goods or services.
As it is direct in nature it will raise awareness and build customer
loyalty. For example: A direct mail flyer is tangible (customers like
having something they can touch) and will be read. E.g., BMW. This
direct mail flyer from BMW had customers cutting a path through a
wintery postcard to emphasize the reliability and control of their snow
tires. Their combination of an envelope and mailer is great creative
thinking and interactive as well.
– A telemarketing call will involve a conversation.
2) To generate leads/ sales: One of the main targets of a direct
marketing campaign is to generate sales and leads. A proportion of
the database

50
 marketed will naturally respond to the campaign and by doing so generate leads or new
customers.

3) Improved customer satisfaction and retention: Direct marketing initiatives will

improve the customer experience and are likely to lead to customer retention. Some
rewards, bonus or points can help retain customers.

4) Reacquiring lost customers: Direct marketing campaigns will target past customers
considered “lost”, a good outcome would be to acquire these customers as once again
active

5) To up sell and cross sell: Up sell aims to sell to an

existing customer by upgrading, and add-ons to a
previous buy to make the overall relationship more
profitable Cross-sell aims to sell a related product or
service to an existing customer who has previously
bought another product or service from the
organization.

6) Repeated sales: A successful direct marketing

campaign gives results even after some years. For
instance, a car dealership approach customer even
post purchase. The good ones stay in contact with
customers time and on often almost creating a
“family” like feeling, or of belonging to a club.
Case study:

Pureit is the water purifier appliance from HUL. Pureit made its test marketing debut in 2005.
The brand was initially launched in Chennai. During the test marketing, the result was
encouraging, and the brand was launched nationally in 2007.The domestic water purifier
appliances market is estimated to be Rs 450 crore and is dominated by Aquaguard from Eureka
Forbes. This category was not growing very fast because of the high cost of the product. The
entry level water purifier was costing anywhere between Rs. 5000- Rs10, 000. Pureit is a
batteryoperated purifier made of high-quality plastic and has a storage capacity of 18 liters. The
51
company uses the following differentiation points against the main competitor Aquaguard by
claiming that the product works without gas/electricity thus the cost per liter of pure water is
very less. Moreover, the brand is priced at a tempting Rs 2000 which makes it the lowest priced
purifier compared to Aquaguard or Kent.

Under the sales method HUL went for personal selling method since ‘Pure It’ was an
unconventional product, therefore the demonstrations. Personal selling is oral communication
with potential buyers of a product with the intention of making a sale. The personal selling may
focus initially on developing a relationship with the potential buyer but will always ultimately
end with an attempt to "close the sale".

Growth of Direct marketing -

1. The service-based economy. The products consumers buy today are almost all functional,
reliable, affordable, and increasingly alike. Consumers look, therefore, for distinction in
refinements and added value service.
2. The nuclear family is a minority group. Long ago it became impossible to target families
using mass media (it was not believed or influential) without reaching more non-family
readers or viewers (they worked as opinion leaders).
3. Home owning, isolation, and security. More and more people own their homes and
consequently spend more time within their four walls. Excursions are made almost
exclusively by car –with an inevitable effect on what and how things are bought.
4. This is the age of experiment. Paradoxically, people are traveling further and mixing
more with other cultures. This influences the food they eat, the way the dress, even the
design of their homes and gardens.
5. The growth of cashless transactions has made possible scientific data-collection and
targeting on a so far unimaginable scale-as well as helping customers to pay.
6. Redistribution of income. Despite political claims and counterclaims, most
7. Growth and Shifts in Marketing. Marketing has completed one cycle to get back to the
primitive marketing in the form of electronic barter system (getting database of
consumers is more important for firms).
● The environment has become more complex.
● Bargaining power of the consumer has increased.
● Market has become more competitive.
● Cost of marketing a product has increased. The retail shelf cost at outlets in major
cities are costly.
● Advertising budgets are high.
● Less customer loyalty.
● Direct Marketing helps companies focus on their marketing efforts.

52
 ● Consumer lifestyle has changed. Today, customers look out for convenience in
shopping. Tele-shopping, home shopping, catalog marketing and online marketing
cater to core customer value.
● Globalization has facilitated the growth of direct marketing.
● Niche markets with distinct preferences- DM
● Technology has changed and enhanced the DM activity.

Economies of Direct Marketing -

The only real justification for direct marketing is results. For a profit-motivated orga nization, the
result should be immediate profit or events that lead to profit (e.g., good sales leads). For a
nonprofit organization, the result should be cost-effective contacts. Of course, one may want to
combine these with other objectives (customer care, quality, attitude change). But the prime
justification is normally monetary. For this, the company should develop one or more business
plans to find out when and how this profit will be achieved. There are many ways to market the
product and service offering, each with its own fees, development cycle and other considerations.
These includes - mailing list, copywriting fees, designer fees, printing, mail services and postage.
Conversely, there’s only one way to make money:

The objective is to have a greater projected difference between sales revenue and expenses to
justify the risk of expenses.

For new businesses, it can be difficult to estimate the rate of return. Since you don't have
previous campaigns to use as a measuring stick, you'll have to rely on estimates when budgeting.
So how do you calculate your return on investment?

Here's the formula:

● (Number of Mailed Pieces x Response Rate x Conversion Rate x Average Sales

Price) - Campaign Cost)/Campaign Cost = ROI
● So, what does all this mean? Here's the breakdown:
● Number of Mailed Pieces = How many mailers you are sending out?
● Response Rate = The percentage of people who respond to the mailers
● Conversion Rate = The percentage of people who make a purchase, based on the
Response Rate and not the Number of Mailed Pieces
● Average Sales Price = How much, on average, each customer spends because of
the campaign
● Campaign Cost = The total spent to develop and deliver your campaign, including
your mailing list, special offers, printing, mailing services, postage, design, and
copywriting

53
 ● ROI = Return on Investment (your percentage of return) Customer Acquisition,

Development and Retention: 3 tasks of DM

The major strategic role of CRM is to manage a company’s relationships with customers though
three stages of the customer lifecycle: customer acquisition, customer retention and customer
development.

A customer acquisition strategy aims to increase the number of customers in the customer base, a
customer retention strategy aims to keep a high proportion of current customers by reducing
customer defections, and a customer development strategy aims to increase the value of those
retained customers to the company. Just as acquisition is focused, so are retention and
development. Not all customers are worth retaining and not all customers have potential for
development.

Customer retention is the strategic objective of striving to maintain long term relationships with
customers. Customer retention is the mirror image of customer defection. A high retention rate is
equivalent to a low defection rate.

Conventionally, customer retention is defined as: the number of customers doing business with a
firm at the end of a financial year expressed as percentage of those who were active customers at
the beginning of the year.

Various methods of customer development: cross selling, up selling, data mining

(transactional history of consumers, customization (personalized communication), channel
integration (various methods to be used to communicate), campaign management (track
effectiveness of the campaign).

Various methods are used for retention of consumers: Meet and exceed their expectations,
customer clubs, build value-based commitment, promotion, loyalty benefits,
Explain each sub-point at least in 2 sentences.

❖ Chapter 3 : Customer relationship management

Customer Relationship Management (CRM) is a comprehensive approach for creating

maintaining and expanding customer relationship.

54
Uber CRM: Case Study

Well, CRM is a good place to start – and for Uber, it’s industry-leading CRM software provider
Salesforce that’s powering the ride-sharing giant’s strategy. Salesforce helps Uber extract data
from people engaging with its brand on social media. With this system in place, Uber can reply
with speed to customer complaints, and track all its interactions with the public from an intuitive
dashboard.

And, of course, it runs its own loyalty program. Uber Rewards lets you earn points every time
you ride or eat with Uber and redeem them across its increasing range of services. It’s a classic
example of how Uber is incentivizing customers to keep relying on its brand, as it continues to
branch out.

Importance of CRM (Customer relationship management) : CRM system provides a

well-defined platform for all business units to interact with their clients and fulfill all their needs
and demands very effectively and to build long-term relationship.

1. A CRM system consists of a historical view and analysis of all the acquired or to be
acquired customers. This helps in reduced searching and correlating customers and to
foresee customer needs effectively and increase business.
2. CRM contains every bit of details of a customer; hence it is very easy for track a
customer accordingly and can be used to determine which customer can be profitable and
which not.
3. In CRM system, customers are grouped according to different aspects according to the
type of business they do or according to demographics and are allocated to different
customer managers often called as account managers. This helps in focusing and
concentrating on every customer separately.
4. A CRM system is not only used to deal with the existing customers but is also useful in
acquiring new customers.
5. The strongest aspect of Customer Relationship Management is that it is very cost-
effective.
6. All the details in CRM system are kept centralized which is available anytime on
fingertips. This reduces the process time and increases productivity.
7. Efficiently dealing with all the customers and providing them what they need increases
the customer satisfaction. This increases the chance of getting more business which
ultimately enhances turnover and profit.
Case study: eCRM Case Study

Walt Disney - "From the Word GO"

55
This case study illustrates how The Walt Disney Company used newsletters to communicate a
Walt Disney web property's (GO.com) new brand positioning, look and feel and tone and
manner.

Background: Walt Disney's GO.com found that they could not compete in the general-purpose
portal space. It was ranked #4 behind Yahoo!, AOL, and MSN. After a rebranding exercise,
GO.com decided to change its position in the marketplace and compete on the strengths of The
Walt Disney Company and focus on entertainment, recreation, and leisure - away from
generalpurpose portal/search. At the same time, in a move toward scalability, GO.com moved
away from editorialized content to focus on search and directory listings for their new core web
strengths (entertainment, recreation and leisure).

Challenge: Approximately 60-70% of GO's traffic was search driven (visitors coming to the site
to undertake web searches vs reading editorialized content). Syndicated research at the time
reported that when a company changed a website's user interface (look, feel, navigation)
appreciably, up to 44% of their visitors would look elsewhere for an alternative. Considering
GO.com's business model was based on advertising (the more visitors, the more banner
impressions, the more the site got paid), GO could not afford to lose that much traffic. Walt
Disney's Director of Marketing, Garret Ippolito, at the time summed up the challenge: "How do
you create a rational and emotional relationship with a search engine?"

Solution: In addition to activities on site, GO needed to communicate to GO's users that 1) GO

was changing and 2) how the new GO was better than before. Part of GO's solution was to
develop a monthly newsletter. The purpose of the newsletter was to: 1) Drive traffic back to GO
2) Brand development - tell the GO.com story. In developing his e-mail strategy, Ippolito wanted
to give GO's users the feeling that the e-mails were written by an individual for an individual.
Further, he decided to break from industry norms and have the e-mails written in a story telling
manner. The rationale behind the story telling was the belief that it kept the e-mails interesting
and unique. Telling stories evoke an emotional reaction. Compelling stories engage users for a
longer period, which translates into higher clickthrough.

Results: The final product was a newsletter called "From the Word GO" by Buzz Daley ('Buzz'
to convey energy and excitement. 'Daley' was a play on Carson Daley - MTV personality). Buzz
wrote in a friendly, fun, playful, tongue-and-cheek/witty manner - the brand personality of the
new GO.com website. Each Newsletter started with a quote to capture the reader's attention and
the layout was designed to pull the reader into the e-mail. Each e-mail was about discovery
leveraging a theme developed for GO's television campaign.
Throughout the e-mail, Buzz Daley solicited feedback from readers - 'Tell
me what you think.' Readers could either write Buzz directly or post
messages on a special message board created for Buzz Daley and the
newsletter.
Consumer Feedback: I love it! Thank you. You actually made me laugh
out loud. - Julie
56
Hi! Just thought I would take a minute to write and let you know how much I enjoyed the
sites..........keep up the good work! :) - Jastes

This was one of the cleverest and humorous letters I've read in a long time.
Tickled my funny bone. GIVE THE AUTHOR A PAY RAISE! WAY TO GO!!! - Mrs. choir.

Advantages & disadvantages of CRM

The goal of customer relationship marketing is to develop loyalty between a particular brand or
company and a targeted customer base.

The advantages of CRM ARE:

● There are many benefits of implementing a CRM system, and these include better
customer management, increased customer acquisition, efficient customer retention, and
improved prospecting for new customers as well as reaching out to old customers for
reviving the relationship. Integrating data from different functions of a business helps you
maximize effectiveness through collaboration. For example, potential customer contact
details can be
‘pushed’ from lead capture forms on your website, into ‘hot lead’ action lists in your
CRM solution – maximizing collaboration between marketing and sales.
● CRM introduces synergies across the customer relationship cycle leading to greater
efficiency and productivity of the employees handling customer relationships. By being
able to visualize your sales pipelines, you can see exactly which deal needs your
immediate attention and which deal has gone stale. By periodic monitoring of deals that
pass through your pipeline, you can identify areas of concern and eliminate them, always
ensuring a clog-free pipeline. Additionally, your marketing and sales team are better
connected, ensuring your sales pipeline is always filled with high-quality leads.
● Further, since the CRM system automates the different customer management functions
(sales, marketing, customer service, and technical support) along with integrating the
entire customer relationship lifecycle, the returns from old, existing, and new customers
are more. A CRM system can help you automate those processes to save time and drive
consistency. You can automate tasks such as scheduling follow-up activities, sending
email campaigns, or assigning contacts to a new sales representative. This way, you can
make sure all your team members are following the same process from start to finish, and
you eliminate the need for repetitive manual work.
● One of the main benefits of a CRM system is that it smoothens the customer retention
process and leads to more returning customers, which is always a sign of a healthy and
productive company. In the modern technological world, a customer expects a lot more
from a company than just a reasonably priced, high-quality product or service. They want
to feel understood, and they want to have an engaging, personalized experience whenever
they get in touch with the company or vice versa. A CRM captures and stores every
customer’s journey from the start to the very end. By knowing their preferences, you can
57
 understand their needs, and by eventually giving them what they need, you get their
loyalty in return.
● The CRM system helps in complementing and supplementing the physical customer
relationship effort and by automating customer touch points; it ensures that there are no
errors or mistakes committed during the customer relationship management process. For
example, if a customer experiences a problem with your product, multiple teams can
work together to solve the issue. While your technical support team is fixing the issue, the
customer service team can communicate the solution to the customer and provide further
assistance. At the same time, the marketing team can adapt their messaging.

● Finally, the enterprise-wide automation of all functions and processes that many
organizations actualize help the CRM subsystem to provide decision makers with a bird’s
eye view of the customer relationship process, empower, and enable them with more
visibility over the process by giving them data and meaningful information. A CRM helps
you improve levels of customer satisfaction, and retention – happy and long-term
customers entail increased revenues. Lastly, with a CRM system, you can create targeted
marketing campaigns so that you can reach out to the right people at the right time and
increase sales. e.g., Netflix uses a personalized recommendation system to suggest
content for its users based on their interests. And in fact, 80% of users stream content
suggested by it.
● Also, Netflix makes use of customers’ past viewed data to predict bandwidth usage. This
helps the service decide when it should cache regional servers to ensure prompt load
times during high demand. Disadvantages of CRM:

1. The main disadvantage with a CRM system is that it might result in idleness being
introduced into the customer management process if latest technology is not
implemented, because of duplication of effort and the double work associated with sales
and marketing personnel unable to adjust to the automation.
2. Second, CRM system might result in more complexity, which if not managed properly
can lead to chaos and a lack of planning for key activities in the sales and marketing
lifecycle.

58
 3. Third, if the implementation and the subsequent user training have not been done
properly, it might result in a workforce that is not qualified as far as the use of the CRM
software is concerned as lot of research work goes into it. This might result in the
workforce being unable to use the system effectively. Finally, the costs from the CRM
implementation can sometimes exceed the benefits leading to losses for the firms.
British Airways CRM: Case Study
The British Airways Executive Club is an example of CRM loyalty schemes done right. Free to
join and with no ongoing charges, the club allows customers to earn ‘Avios’ points through
purchasing flights, hotel stays, holidays, or car rental through BA or its partners. Avios points
can then be redeemed for discounts on travel or accommodation with (you guessed it!) BA.
Customers can save their meal and seat preferences, making for a smoother, more seamless re-
booking experience. And, as they continue to fly with BA, they’ll be able to progress through the
levels of Executive Club membership – from blue to bronze, silver to gold, then (maybe one day)
the elusive ‘Premier’ tier. To keep track of all this, BA has been using a CRM solution called
Teradata since 2002. It allows the airline to keep track of all the customers on its books and re-
engage them with offers and deals targeted to their level of membership and favorite
destinations. Customer Loyalty and its importance

Case study: Loyalty program of Starbucks:

● “Stars” customers collect for every dollar they spend, which can be exchanged for food
and drinks.
● Free treats for customers on their birthdays
● Exclusive offers and “bonus stars”
as prizes for playing in-app games.
● On top of all that, Starbucks offers loyalty
program members both a mobile app and
credit cards (traditional or prepaid). The
former sends push notifications regarding freebies and can be used to pay for food and
drinks in-store and redeem rewards.
● The incentives to keep coming back are strong, and the program has elements of
gamification. Although its prices are a bit higher than other coffee brands, Starbucks has
managed to continue to dominate the industry.
● One of the most important things you can learn from the Starbucks Rewards program is
that you should not make it hard for loyal customers to access or use their perks. The
feeling of constantly being rewarded helps keep them coming back.
Building relationships is a challenge,
especially when a firm has many, often mil
lions, of customers who interact with the firm in
many ways (from e-mail to call centers to face-
to-face interactions). When implemented well,
59
customer relationship manage ment (CRM) systems provide managers with the tools to
understand their customers and tailor their service, crossselling, and retention efforts, often on a
one-onone basis.

Loyalty has been used in a business context to describe a customer's willingness to continue
patronizing a firm over the long term, purchasing, and using its goods and services on a repeated
and preferably exclusive basis, and recommending the firm's products to friends and associates.
The importance of loyalty programs are:

1. Profit derived from increased purchases - Over time, business customers often grow
larger and so need to purchase in greater quantities. Individuals may also purchase more
as their families grow or as they become more affluent. Both types of customers may
decide to consolidate their purchases with a single supplier that provides high-quality
service. E.g., Amazon customers on Prime services.
2. Profit from reduced operating costs - As customers become more experienced, they
make fewer demands on the supplier (for instance, less need for information and
assistance). They may also make fewer mistakes in operational processes, thus
contributing to greater productivity. E.g., placing order at Amazon by new customer and
old customer, query raised by new customer.
3. Profit from referrals to other customers - Positive word-of-mouth recommenda tions
are like free sales and advertising, saving the firm from having to invest as much money
in these activities. E.g., referring a salon or restaurant to friends and family
4. Profit from price premium - New customers often
benefit from introductory pro motional discounts,
whereas long-term customers are more likely to pay
regular prices. Moreover, when customers trust a
supplier, they may be more willing to pay higher
prices. E.g., customers are ready to pay more to the
trusted jeweler rather than one who is offering
discount.

Features of Customer relationship management - Customer Relationship Management is a

strategy which is customized by an organization to manage and administrate its customers and
vendors in an efficient manner for achieving excellence in business. It is primarily entangled
with following features:
1. Customers Needs - An organization can never assume what a customer need. Hence it is
extremely important to interview a customer about all the likes and dislikes so that the
actual needs can be ascertained and prioritized. Without modulating the actual needs, it is
difficult to serve the customer effectively and maintain a long-term relationship. E.g.,
extensive research
2. Customers Response - Customer response is the reaction by the organization to the
queries and activities of the customer. Dealing with these queries intelligently is very

60
 important as small misunderstandings could convey different perceptions. Success totally
depends on the understanding and interpreting these queries and then working out to
provide the best solution. During this situation if the supplier wins to satisfy the customer
by properly answering to his queries, he succeeds in explicating a professional and
emotional relationship with him. E.g., online medical deliveries supposed to appoint a
doctor to handle queries.
3. Customer Satisfaction - Customer satisfaction is the measure of how the needs and
responses are collaborated and delivered to excel customer expectation. In today’s
competitive business marketplace, customer satisfaction is an important performance
advocate and basic differentiator of business strategies. Hence, the more is customer
satisfaction; more is the business and the bonding with customer.
4. Customer Loyalty - Customer loyalty is the tendency of the customer to remain in
business with a particular supplier and buy the products regularly. This is usually seen
when a customer is very much satisfied by the supplier and re-visits the organization for
business deals, or when he is tended towards re-buying a particular product or brand over
times by that supplier. To continue the customer loyalty the most important aspect an
organization should focus on is customer satisfaction. Hence, customer loyalty is an
influencing aspect of CRM and is always crucial for business success. E.g., Nike, Levi’s
5. Customer Retention - Customer retention is a strategic process to keep or retain the
existing customers and not letting them to diverge or defect to other suppliers or
organization for business. Usually, a loyal customer is tended towards sticking to a
particular brand or product as far as his basic needs continue to be properly fulfilled. He
does not opt for taking a risk in going for a new product. More is the possibility to retain
customers the more is the probability of net growth of business. E.g., Loyalty cards,
frequent flyer points
6. Customer Complaints - Always there exists a challenge for suppliers to deal with
complaints raised by cu tomers. There can be several reasons for a customer to launch a
complaint. A genuine reason can also exist due to which the customer is dissatisfied but
sometimes complaints are launched due to some sort of misunderstanding in analyzing
and interpreting the conditions of the deal provided by the supplier regarding any product
or service. Handling these complaints to ultimate satisfaction of the customer is
substantial for any organization and hence it is essential for them to have predefined set
of process in CRM to deal with these complaints and efficiently resolve it in no time. E.g.
call centers
7. Customer Service - In an organization Customer Service is the process of delivering
information and services regarding all the products and brands. Customer satisfaction
depends on quality of service provided to him by the supplier. The organization has not
only to elaborate and clarify the details of the services to be provided to the customer but
also to abide with the conditions as well. If the quality and trend of service go beyond
customer’s expectation, the organization is supposed to have a good business with
customers. E.g. banks, cars service centers etc.

61
Managing Customer Relations

1. Targeting The Right Customers

The process starts by identifying and targeting the right customers. Customers often differ widely
in terms of needs and the value they can contribute to a company Not all customers offer a good
fit with the organization's capabilities, delivery technologies, and strategic direction

a. Good Relationships Start with a Good Fit - If they want to build successful
customer relationships, companies need to be selective about the segments they
target
2. Searching for Value, Not Just Numbers

Acquiring the right customers can bring in long-term revenues, continued growth from referrals,
and enhanced satisfaction from employees whose daily jobs are im proved when they can deal
with appreciative customers.

3. Selecting an Appropriate Customer Portfolio

Like investments, some types of customers may be more profitable than others in the short term,
but others may have greater potential for long-term growth. Similarly, the spending patterns of
some customers may be stable over time, whereas others may be more volatile – some customers
tend to spend heavily in festive times.
4. Tiering the Customer Base

Customer tiers can be developed around various levels of profit contribution, different needs
(including sensitivities to such variables as price, comfort, and speed), and identifi able personal
profiles, such as demographics

5. Analyzing and Managing the Customer Base

Marketers should adopt a strategic approach to retaining, upgrading, and even termi nating
customers. Recent re search has confirmed that most firms have several tiers of customers in
terms of prof itability and that these tiers often have quite different expectations and needs

6. Retaining, Upgrading, and Terminating Customers

Generally, customer tiers are based on not only
profitability but also other identifiable characteristics
common among these different segments. Marketing
efforts can be used to encourage an increased volume of
purchases, up grading the type of service used, or cross-
selling additional services to any of the four tiers.
Terminating customers comes as a logical consequence of

62
the realization that not all existing customer relationships are worth
keeping. Some customers no longer fit the firm's strategy, either
because it has changed or because the customers' behavior and needs
have changed.

● Relationship Marketing

Marketers want customers for life. Effective marketers work to build long-term relationship with
their customers. Relationship marketing means the marketing activities aimed at building long
term relationship with people (especially customers) and organization that contribute to the
company’s success. Relationship Marketing draws from traditional marketing princi ples, yet is
quite different.

Characteristics of Relationship Marketing

1. Emphasizes a relationship, rather than a transactional approach to marketing.

2. Extends the principles of traditional marketing to a range of diverse market domains, not
just customer markets;
3. Recognizes that quality, customer service and marketing need to be much more closely
integrated; understands the economics of customer retention and so that resources are
appropriately allocated between the two tasks of retaining and attracting customers;
4. Highlights the critical role of internal marketing in achieving external marketing success;
5. Ensures that marketing is considered in a cross- functional context;

Three core Relationship Marketing Strategies:

● Get Found:
Understand that the first step to building an online customer
relationship is getting found. This means giving away loads of
free content that’s closely aligned to the content you wish to
sell.
● Get Followed:
It’s hard to sell anything to anyone when there’s no trust, no
relationship, no shared experience. Content marketing offers
people with a shared interest the opportunity to let you leave
them two things they didn’t know, didn’t know they needed,
didn’t know they wanted. Sampling is done best in small
quantities where trust can be established over time. While
social media is valuable, email newsletters are the all time

63
costeffective way to build a relationship marketing program where content is the driving force
and frequency is daily.
● Get Paid:
Once trust is established, you get to make the first sale. If you have great products and services,
the follow-on sales will get easier and easier. But make no mistake about it, you made the first
sale because you built a relationship using free content, frequent.
Case study: VW case

● It typically costs 5-10 times as much to acquire a new customer as it does to retain an
existing one.
● A recent McKinsey study showed that the average new customer spends$24.50at a given
web site in the first 3 months as a shopper. The average repeat customer spends $52.50
every 3 months.
● Most companies lose 50%of their customers in 5 years (Harvard University) ● 70% of
repeat purchases are made out of indifference to the seller, NOT loyalty.
● The web customer is only 1 click away from your competition
● It takes 7 to 17seconds to make a first impression, 55%of sales happen because of the
first impression only.
● Volkswagen (VW) is one of the world’s leading automobile manufacturers and the
largest carmaker in Europe. As Volkswagen pursues its goal of becoming the number
one automaker in the world by 2018, India has become a key component of its strategy.
India is currently the world’s second fastest growing car market, with shipments
expected to more than double by 2018.

CRM PRACTICE -1 “TALKING NEWS PAPER” •

● VW India created ground breaking campaigns such as the world’s first "talking
newspaper"
● It used light-sensitive chips to speak to readers about Volkswagen as they turned the
pages of their morning newspaper. The talking newspaper ad created a sensation in India,
and garnered worldwide attention for taking print advertising to a new level. In one year,
brand awareness increased from 8 percent to a high of 37 percent.

CRM PRACTICE -2 “ATTRACTING WORKING PROFESSIONALS”

● Challenge- Create brand awareness among working professionals, Build loyalty and
aspiration, Influence, decision-making
● Solution- Establish VW-branded Company Page on LinkedIn
● Enable LinkedIn members to recommend their favorite VW models
● Use LinkedIn Recommendation Ads to extend reach

64
 ● 2,700 product recommendations in 30 days
● 2,300 new followers on VW India Company Page
● 960,000 viral updates about VW car models

CRM PRACTICE –

6 “PLANET
VOLKSWAGEN

● A new digital
campaign, like most of its other initiatives, it is
rich in creativity and ideas.
● It features a rotating globe with different land masses for each of Volkswagen India’s
departments
● Since the brand is not very old but has caught on quickly with Indian people, many want
to learn the heritage, technology and German company’s background.
● There is a Junior section targeted at kids who Volkswagen see as future customers.

Chapter 4 : IMC (Integrated Marketing Communication)

The American Association of Advertising Agencies

defines integrated communications as “A concept of
marketing communications planning that recognizes
the added value in a program that integrates a
variety of strategic disci plines, e.g., general
advertising, direct response, sales promotion, and public
relations—and combines these disciplines to provide
clarity, con sistency, and maximum communications
impact.”

65
"Integrated communication" is simply the deployment of all
marketing com munications media together in a consistent way

The various tools of IMC are :

a. Advertising - Any paid form of non-personal communication through mass media about
a service or product or an idea by a sponsor is called advertising e.g, Print and Broadcast
advertisements, advertisements in Television, Radio, Billboard, Broachers and
Catalogues, Direct mails, In-store display, motion pictures, emails, banner ads, web
pages, posters. Paid promotion and presentation of goods, services, ideas by a sponsor
comes under the advertisement.
b. Personal Selling - Personal selling is a person-to-person process by which the seller
learns about the prospective buyer's wants and seeks to satisfy them by making a sale.
E.g., salesman selling cars by explaining features.
c. Internet Marketing - Online marketing, also known as internet marketing or web
advertising, is a form of marketing that uses the internet to deliver promotional messages
to customers through digital channels such as search engines, email, websites, and social
media.
d. Public Relation - Unlike advertising, this form of promotion is not paid for by the
sponsor. Thus, publicity is news carried in the mass media about an organization, its
products, policies, actions, personnel etc. Publicity can be favorable (positive) or
unfavorable (Negative). The message is in the hands of media and not controlled by the
organization/firm.
e. Sales promotion - Is any activity that offers an incentive for a limited period to obtain a
desired response from the target audience or intermediaries which includes wholesalers
and retailers. Examples: Contests, product samples, Coupons, sweepstakes, rebates, trade
shows, trade-ins, and exhibitions
f. Direct Marketing is reaching the customer without using the traditional channels of
advertising such as radio, newspaper, television etc. Direct marketing reaches the targeted
consumers with techniques such as Catalogues, Mailings, Telemarketing, Electronic
shopping, TV Shopping, promotional, fliers etc.
Combining Direct marketing with Advertising:

Direct Marketing is a form of marketing through mail, print or TV- Direct response ad. Direct
response marketing is designed to elicit an instant response by encouraging prospects to take a
specific action. Direct response advertisements must trigger immediate action from prospects
since the goal is to generate leads quickly. In contrast to traditional marketing, which aims to
raise brand awareness and promote brand image long term, direct response marketing shows
immediate ROI. E.g., Star CJ Live, Home Shop 18.

66
Personalization and targeting: While it may be tempting to target a
superlarge audience, direct response marketing works best when you have a
specific buyer persona in mind. Take this top Facebook ad hack for example,
where you can boost CTR (click-through-rates) significantly by targeting
unrelated interests: “Life took me to England, but I’ll always be an Arizona
girl.” Look at the comments, they’re comical. People can’t even believe they
were served an ad so specific to their background. But this is nothing sinister.
It’s been coined the term, “Inverted Unicorn Facebook Ad Targeting
Method.” If you think about it, you know that you can target women, and you
know that you can target people who live in the UK, right?

Example of referral marketing campaign

● Combining Direct Marketing with Internet/Interactive: Direct marketing makes use

of online promotions through websites, interactive, CDs/DVDs/kiosks to seek a response
or complete a sale. Online catalogues promote the product/service to elicit a response.
Giveaways and contests are one of the best ways to quickly increase engagement on
Facebook. And the best way to run a Facebook contest is via Messenger.
● Combining Direct Marketing with Public Relations/ Publicity : Public relations
activities and Publicity oriented activities employ direct marketing & direct response
techniques. Direct Marketing involves communicating directly with buyers about their
products via different channels. The individual buyer is the target in direct marketing and
not the masses Examples: direct mail, e-mail, apps, telephone calls (telemarketing),
catalogues, fliers, promotional letters, etc. The goal is to generate sales or leads for sales
representatives to pursue. If the customer is interested, he/ she can directly contact the
concerned department or person on the telephone number of address given with the
message. Direct marketing allows a business to engage in one-way communication with
its customers. It helps organizations inform the prospective buyers about product
announcements, special promotions, etc.
● Combining Direct Marketing with Personal Selling : Telemarketing & direct selling is
an aspect of Personal selling. In multi-stage selling, direct mailers are used to invite
prospects or after direct selling efforts, direct mailers are sent as a follow-up & reminder.
● Combining Direct Marketing with Sales Promotion : Direct mailers inform a prospect
of sales promotion events/activities or invites a prospect by way of contests & prizes &
gifts as incentives. In sales promotion implementation, direct marketing tools are
employed to inform customers.

Customers can be of following types:

1. Loyal Customers- These types of customers are less in numbers but promote more sales
and profit as compared to other customers as these are the ones which are completely
satisfied. These customers revisit the organization over times hence it is crucial to interact
and keep in touch with them on a regular basis and invest much time and effort with
67
 them. Loyal customers want individual attention and that demands polite and respectful
responses from supplier.
2. Discount Customers- Discount customers are also frequent visitors, but they are only a
part of business when offered with discounts on regular products and brands or they buy
only low-cost products. More is the discount the more they tend towards buying. These
customers are mostly related to small industries or the industries that focus on low or
marginal investments on products. Focus on these types of customers is also important as
they also promote distinguished part of profit into business.
3. Impulsive Customers- These customers are difficult to convince as they want to do the
business in urge or impulse. They do not have any specific item into their product list but
urge to buy what they find good and productive at that point of time. Handling these
customers is a challenge as they are not particularly looking for a product and want the
supplier to display all the useful products, they have in their tally in front of them so that
they can buy what they like from that display. If impulsive customers are treated
accordingly then there is high probability that these customers could be a responsible for
high percentage of selling.
4. Need Based Customers- These customers are product specific and only tend to buy
items only to which they are habitual or have a specific need for them. These are frequent
customers but do not become a part of buying most of the times, so it is difficult to satisfy
them. These customers should be handled positively by showing them ways and reasons
to switch to other similar products and brands and initiating them to buy these. These
customers could possibly be lost if not tackled efficiently with positive interaction.
5. Wandering Customers- These are the least profitable customers as sometimes they
themselves are not sure what to buy. These customers are normally new in industry and
most of the times visit suppliers only for confirming their needs on products. They
investigate features of most prominent products in the market but do not buy any of those
or show least interest in buying. To grab such customers, they should be properly
informed about the various positive features of the products so that they develop a sense
of interest. ❖ IMC strategy (case study pointers)

The cost of using media is extremely high today and so the promotional decisions must be made
carefully, using a systematic approach.

Identifying the Target Audience

The first decision in developing the promotion program is identifying the target audience. The
target audience for the promotion program is the target market for firm’s product, which is
identified from marketing research and market segmentation studies.

Clarifying the Marketing Objectives

Once target audience is identified, a decision must be reached on what the promotion should
accomplish Consumers can be said to respond in terms of a hierarchy of effects, which is a

68
sequence of stages a prospective buyer goes through from initial awareness of a product to
eventual action (either trial or adoption of the product) Some of the objectives are:

● Awareness: It is the first step in the consumer behavior process. It is the consumer’s
ability to recognize and remember the product or brand name.
● Interest: Awareness of the product creates a curiosity or interest in the product ●
Evaluation: The consumer’s appraisal of the product or brand on important attributes.
● Trial: The consumer’s actual first purchase and use of the product or brand.
● Adoption: Through a favorable experience on the first trial, the consumer’s repeated
purchase and use of the product or brand.
● Deciding the Promotion Budget : After setting the promotion objectives, a company
must decide on how much to spend.
a. Sales Percentage Method: In this approach, the amount of money spent on
promotion is a percentage of past or anticipated sales. The promotion budget for
this year is 3 percent of last year’s gross sales.
b. Competitive Parity Method: This budgeting approach matches the competitor’s
absolute level of spending or the proportion per point of market share.
c. All you can afford” Method: Common to many businesses, the all-you-can-
afford budgeting method allows money to be spent on promotion only after all
other budget items such as manufacturing costs are covered.
Selecting an Effective Promotional Mix - Once a budget has been determined, the combination
of the IMC tools like advertising, personal selling; sales promotion, public relations, and direct
marketing can be specified. Selection of the appropriate mix, the large number of possible
combinations of the promotional tools means that many combinations can achieve the same
objective.

Designing the Promotion - The central element of a promotion program is the promotion itself.
Advertising consists of advertising copy and the artwork that the target audience is intended to
see or hear. Personal selling efforts depend on the characteristics and skills of the salesperson.
Sales promotion activates consist of the specific details of inducements such as coupons,
samples, and sweepstakes. Public relations efforts are readily seen in tangible elements such as
news release, and direct marketing actions depend on written, verbal, and electronic forms of
delivery.

Scheduling the Promotion - The promotion schedule describes the order in which each
promotional tool is introduced and the frequency of its use during the campaign. Businesses such
as ski resorts, airlines, and professional sports teams are likely to reduce their promotional
activity, during the off season.

Executing and evaluating the Promotional Program - Ideal execution of a promotional

program involves pre-testing each design before it is used to allow for changes and modifications

69
which improve its effectiveness. Similarly, post tests are recommended to evaluate the impact of
each promotion and the contribution of the promotion toward achieving the program objective.

Importance of IMC

The growing importance of the IMC approach is the ongoing revolution that is changing the rules
of marketing and the role of the traditional advertising agency. Major characteristics of this
marketing revolution include:

1. A shifting of marketing spends - A shifting of marketing spends from media advertising

to other forms of pro motion particularly consumer and trade-oriented sales promotions.
Many marketers feel that traditional media advertising has become too expensive and is
not cost-effective. Also, escalating price promotion has in many markets has resulted in
marketers increasing their promotional budget rather than media advertising.
2. A movement away - Many companies are turning to lower-cost, more targeted
communication tools such as event marketing and sponsorships direct mail, sales
promotion, and the Internet as they develop their marketing communication strategies
rather than relying on focused mass media, to solve communication problems.
3. A shift in marketplace - A shift in marketplace power from manufacturers to retailers
Due to consoli dation in the retail industry, small local retailers are being replaced by
regional, national, and international chains. Moreover, new technologies such as checkout
scanners give retailers information on the effectiveness of manufacturers' promotional
programs. This is leading many marketers to shift their focus to promotional tools that
can produce short-term results, such as sale promotion.
4. The rapid growth - The rapid growth and development of database marketing. Many
companies are building databases containing customer names; geographic, demographic,
and psychographic profiles; purchase patterns; media preferences: credit rat ings; and
other characteristics. Marketers are using this information to target consumers through a
variety of direct-marketing methods such as telemarketing, direct mail, and direct-
response advertising, rather than relying on mass media. Database marketing is
critical to the development and practice of effective IMC.
5. Greater accountability - Demands for greater accountability from advertising agencies
and changes in the way agencies are compensated. Demands for accountability are
motivating many agencies to consider a variety of communication tools and less
expensive alternatives to mass-media advertising.
6. Growth of Internet - The rapid growth of the Internet, which is changing the very nature
of how companies do business and the ways they communicate and interact with
consumers. Internet is an interactive medium is becoming an integral part of
communications strategy, and even business strategy, for many companies.

70
 Chapter 5

Direct marketing analysis

LIFE TIME VALUE OF CUSTOMERS ( LTV )
Bitran & Mondschein have defined LTV as 'the total net contribution that a customer generates
during his or her lifetime on a house list’.

The lifetime value (LTC/LTV/CLV) of a new customer can also be defined as 'the net present value of all
future contributions to overhead and profits’.

It is a measure of the total worth to an organization of its relationship with a particular customer.

To calculate it, one must estimate the costs & revenues that will be associated with managing the
communication with that customer during each year of his / her relationship.

For example, if the expected relationship of a customer is four years, then the cost of servicing the
relationship with that customer (mail, newsletter, catalog, telephone etc) should be subtracted from the
revenue generated. There is some amount of crystal ball grazing involved since it becomes increasingly
more & more difficult to predict future costs & revenues the further one investigates the future.

The 4 most important factors contributing to a customer’s lifetime value are-

• Future Forecast Revenue

• Expenses

• Profits

• Cost of Capital

Income Expenses

71
Calculating the LTV of individual customers

The formula for calculating LTV in the case of an individual customer is as follows:

LTV=Ci (1+d)-i

i=0

Where:
Ci = net contribution from each year's marketing activities income-expenditure

d = discount rate always 10% i = the expected duration of the relationship (in

years). Sigma- summation

i=0 is the lowest value

Upper value of Sigma (n) is of highest value

So, i and n is the range… the value can be between this numbers

This somewhat complex looking equation merely indicates that it is necessary to calculate the likely future
contribution by a customer to each year's marketing activities, discount these future contributions and then
add them all together. The grand total is the LTV of a given customer.

How to measure direct mail campaigns

The following are the factors to measure direct mail campaign:
1) Cost per mail piece: Carefully look at what it takes to complete a Direct Mail campaign.
Other than the cost of designing, printing and postage or mailing, there are also the other costs
connected to overall project management, response management and updating of data
regularly. Cost per piece is determined by taking the total cost of your mailer and then
dividing it by the number of pieces you sent out. With a large mailing, it is easy to see that
the cost per piece decreases – and the potential for new acquisitions increases.
2 ) Cost per acquisition (CPA), also known as pay per acquisition (PPA) and cost per conversion,
is an online advertising pricing model where the advertiser pays for each specified
acquisition - for example, an impression, click, form submit (e.g., contact request,
newsletter sign up, registration etc.), or sale. Direct response advertisers consider CPA the
best possible way to buy online advertising, as an advertiser only pays for the ad when the
desired acquisition has occurred.

The desired acquisition to be performed is determined by the advertiser. Radio and TV stations
also sometimes offer unsold inventory on a cost per acquisition basis, but this form of
advertising is most often referred to as "per inquiry". Although less common, print media will
also sometimes be sold on a CPA basis.
To calculate the cost per acquisition, divide the total cost of planning, creating, and mailing the
campaign, by the number of responses you receive.

72
3) Response rate: To measure the response rate for a direct marketing campaign, divide the
number of people who responded to the campaign with the number of people to whom the direct mail
piece was sent.

With Direct Mail, it can easily cross-check by asking people to respond by phone or online. The
phone numbers may be down to the type of mailer that has been sent out. The mail sent can be
either a catalogue or brochure or post card can be in color with strong design and layout. One
should try to get balance of the response rate against the overall investment.

How do you measure response?

The response rate is the simplest, most common form of measuring the results of a direct mail
program. The response rate reflects the percentage of people who respond to a mailing. To
determine your response rate, you simply count up the number of responses the mailing
generates, then divide by the quantity mailed.
For example:
100 responses divided by 5,000 pieces mailed = 2% response rate.
4) Call to action (CTA)
Call to action (CTA) is an instruction to the audience designed to provoke an immediate
response, usually using an imperative verb such as "call now", "find out more" or "visit a
store today".
Other types of calls-to-action might provide consumers with strong reasons for purchasing
immediately such an offer that is only available for a limited time (e.g., 'Offer expire soon';
'Limited stocks available') or a special deal usually accompanied by a time constraint (e.g.
'Order before midnight to receive a free gift with your order'; 'Two for the price of one for first 50
callers only'). The key to a powerful call-to-action is to provide consumers with compelling
reasons to purchase promptly rather than defer purchase decisions. A CTA can be a simple
non-demanding request like "choose a colour" or "watch this video", or a much more demanding
request. An obvious CTA would be a request for the consumer to purchase a product or provide
personal details and contact information.
5) Click-through rate (CTR) is the ratio of users who click on a specific link to the number of
total users who view a page, email, or advertisement. It is commonly used to measure the
success of an online advertising campaign for a particular website as well as the effectiveness
of email campaigns. For example, if you had 5 clicks and 100 impressions, then your CTR
would be 0.05%.The purpose of click-through rates is to measure the ratio of clicks
to impressions of an online ad or email marketing campaign. Generally, the higher the CTR
the more effective the marketing campaign has been at bringing people to a website.

Chapter 6

73
 Database management:
What is data?
Data is defined as facts or figures, or information that is stored in or used by a computer. An
example of data is information collected for a research paper. An example of data is an
email. The first English use of the word "data" is from the 1640s. The word "data" was first
used to mean "transmissible and storable computer information" in 1946. According to a
common view, data are collected and analyzed; data only becomes information suitable for
making decisions once it has been analyzed in some fashion.

What is database?
A database is your own private weapon in the battle for business.

The broadest definition of a database would be “The sum total of all the
information that an organization keeps”.

A database is a collection of data, organized logically and managed by a

unifying set of principles, procedures, and functionalities, that helps
guarantee the consistent application and interpretation of that data across the
organization.

A database is a collection of information that is organized so that it can easily be

accessed, managed, and updated.”

Database Management is the process of managing data as a resource that is

valuable to an organization or business.

Merriam Webster defines a database as “a usually large collection of data organized

especially for rapid search and retrieval (as by a computer)”

Characteristics of a database

1. Allow users to build database and specify the structure of data that will
contain the information related to the business.
2. Allow the user to easily modify or edit.
3. Facilitate the storage of very large amounts of data.
4. Control access to the data, from multiple users, without allowing the
actions of one user to affect others and without allowing multiple
access to corrupt the stored information.
5. The database software should be flexible enough to link with other
systems.
6. Database software should also be capable of performing basic forms of
analysis.

74
 7. Most database applications help prepare reports easily.

Database marketing

Database marketing is a form of direct marketing using databases of customers or

potential customers to generate personalized communications to promote a product
or service for marketing purposes. It is an extremely essential part of marketing in
many industries.

Such databases include customers’ names and addresses, phone numbers, emails,
purchase histories, information requests, and any other data that can be legally and
accurately collected Information for these databases might be obtained through
application forms for free products, credit applications, contest entry forms, product
warranty cards, and subscriptions to product newsletters.
Database marketing has long been in the domain of the Fortune 500, companies
that spend millions of dollars on their marketing efforts. It is now in the domain of
smaller organizations with smaller budgets.

According to a study conducted by Forbes, companies who adopt data-driven

marketing are more likely to have an advantage over the competition and increase
profitability. In fact, they are six times more likely to be profitable year-over-year.
This shows the true value that comes along with implementing database marketing
strategies.

Thanks to today's sophisticated yet inexpensive computer technology, it can be

expedited efficiently, simply, and cost-effectively.

Database-driven Direct Mail is a superb tool for generating efficient responses,

strengthening customer relationships, and settling the foundation for even more
powerful marketing programs in the future. People receive between 300 and 3,000
marketing messages a day but can only retain a maximum of three. Therefore, if you
are not offering personalized and customized content at the most vital and receptive
times for your audience, you end up wasting valuable data and opportunities to
shine.

The three main stages of effective database marketing

Data collection – relates to the aggregation of accurate and relevant data about both
existing and potential customers, and then ensuring the data is made available in such a
way as it available for use by the company’s marketers in their related activities. (Point-
of-sale) e.g., Ola collects database at the point of sale, when a consumer wants to use
the service.
75
e.g., online transaction, easy for banks and insurance companies to have data.

Turning data into knowledge – requires analyzing the data so that it becomes data
which can be used in effective marketing and communications. For many businesses
this involves using the information to segment existing and potential customers so that
targeted and appropriate marketing message can be created for existing and potential
customers.

e.g., demography wise segregate the

potential
customers and
marketing the
product and
services to them
like Amazon,
from online
bookstore to
pantry to style.

Below is a great database marketing example from Sephora.

In this case, they are targeting members of their loyalty
program, "Sephora Insiders" who haven't made a recent
purchase.

The offer is clear and powerful - "Don't forget your $15 off of
$ 75". Once engaged with, Sephora is able to enrich the
customer profile with the items purchased, and make use of
the next database marketing example tactic: replenishment
campaigns.
Developing and evolving business strategies – involves
using the data and the knowledge within a database for shaping the strategy of the
business. For example, modifying company communications, the allocation of

76
resources, pricing and other concerns that will aid long-term profit in line with the
information gathered.

The first stage is customer acquisition, where a visitor first becomes a customer. Second
is customer retention, wherein a customer continues to engage with your brand and
shows loyalty through repeat purchase.

Finally, there is a customer development stage where customers expand into other
product lines or refer clients. You can learn more about advanced customer lifecycle
marketing tactics here.

With database marketing, you are also able to:

• Identify and prioritize your most loyal customers.

• Separate your audience into relevant segments.
• Analyze insights in real-time when it comes to tracking customers throughout the
decisionmaking process.
• Use customer feedback and behavior to update your marketing strategies.
• Improve your level of brand awareness and identification.
• Create a well-organized resource full of useful data and information to refer to.

Netflix database marketing:

Netflix has mastered the art of B2C data management in the entertainment media space. Its
recommendation-based algorithm that suggests programming based on customers’ viewing
patterns is a prime example of effective and efficient database marketing. Once Netflix’s
algorithm suggests something to a viewer, it will then cross-reference that with other viewers
who have similar taste and viewer preferences.
Ultimately, Netflix’s use of data continues in this cycle, catering to its diverse community of
subscribers with personalized suggestions to simplify the user experience.

Database management system:

Database Management System (DBMS) is a software for storing and retrieving users'
data while considering appropriate security measures. It consists of a group of programs
which manipulate the database. The DBMS accepts the request for data from an
application and instructs the operating system to provide the specific data. In large
systems, a DBMS helps users and other third-party software to store and retrieve data.

DBMS allows users to create their own databases as per their requirement. The term
“DBMS” includes the user of the database and other application programs. It provides
an interface between the data and the software application.

Let us see a simple example of a university database. This database is maintaining

information concerning students, courses, and grades in a university environment. The
database is organized as five files:

77
 • The STUDENT file stores data of each student.
• The COURSE file stores contain data on each course.
• The SECTION stores the information about sections in a particular course.
• The GRADE file stores the grades which students receive in the various sections.
• The TUTOR file contains information about each professor.

Characteristics of Database Management System

• Provides security and removes redundancy.
• Self-describing nature of a database system
• Insulation between programs and data extraction
• Support of multiple views of the data
• Sharing of data and multiuser transaction processing
• DBMS allows entities and relations among them to form tables.
• It follows the ACID concept (Atomicity (multiple operations can be grouped into a
single logical entity), Consistency, Isolation, and Durability).
• DBMS supports multi-user environment that allows users to access and manipulate data
in parallel.

Application of DBMS

Banking: For customer information, account activities, payments, deposits,

loans, etc.
Airlines: For reservations and schedule information.
Universities: For student information, course registrations, colleges, and grades.
Telecommunication: It helps to keep call records, monthly bills, maintaining
balances, etc.
Finance: For storing information about stock, sales, and purchases of financial
instruments like stocks and bonds.
Sales: Use for storing customer, product & sales information.
Manufacturing: It is used for the management of supply chain and for tracking
production of items. Inventories status in warehouses.

Relational Database Management Systems

A database management system (DBMS) is a system which stores a large amount

of data.

It is software that allows functions of storing, retrieving, adding, deleting, and

modifying data.

Advantages:

Improved data sharing: The DBMS helps create an environment in which end
users have better access to more and better-managed data.

78
Improved data security: The more users access the data, the greater the risks of
data security breaches. Corporations invest considerable amounts of time, effort,
and money to ensure that corporate data are used properly.

Better data integration: Wider access to well-managed data promotes an

integrated view of the organization’s operations and a clearer view of the big picture.

Minimized data inconsistency: Data inconsistency exists when different versions

of the same data appear in different places.

Improved data access: The DBMS makes it possible to produce quick answers to
ad hoc queries. From a database perspective, a query is a specific request issued to
the DBMS for data manipulation—for example, to read or update the data. Simply
put, a query is a question, and an ad hoc query is a spur-of-the-moment question.
The DBMS sends back an answer (called the query result set) to the application. For
example, end users.

Improved decision making: Better-managed data and improved data access make
it possible to generate better-quality information, on which better decisions are
based.

The quality of the information generated depends on the quality of the underlying
data.

Disadvantages:

Increased costs: Database systems require sophisticated hardware and software

and highly skilled personnel.

Management complexity: Database systems interface with many different

technologies and have a significant impact on a company’s resources.

The changes introduced by the adoption of a database system must be properly

managed to ensure that they help advance the company’s objectives. Given the fact
that database systems hold crucial company data that are accessed from multiple
sources, security issues must be assessed constantly.

Relational database management systems (RDBMS) implement the relational

model of tables and relationships.

They allow the user to specify the information about multiple tables and the
relationships between the tables, and often declarative controls over, which bind the
table to obey them, particularly called database constraints.

In short form relational database management system is also known as RDBMS.

Examples: MS Access, MS SQL Server and MySQL. MS Access and MS SQL
are the Microsoft product which MySQL is developed by MySQL AB.
79
Characteristics of Database Marketing

The characteristics of database marketing are:

1.Each actual or potential customer is identified as a record on the marketing database.

The markets and market segments are groups of individual customers.

2.Each customer record contains not only identification and access information but also
a range of marketing information. It also includes information about past transactions
and about campaign communications.

3.The information is available to the company during the process of each transaction
with the customer, to enable it to decide how to respond to the customer's needs.

4.The database is used to record customer responses to company initiatives.

5.The information is available to marketing policy makers to enable them to decide such
things as which target markets / segments are appropriate for each product / service
etc.

6.In large companies, selling many products to each customer, the database is used to
ensure that the approach to the customer is coordinated, and a consistent approach
developed.

7.The database eventually replaces market research. Marketing campaigns are devised
such that the response of customers to the campaign provides information, which the
company is looking for.

80
8.It is full-fledged marketing automation developed to handle the vast amount of
information generated. Very few companies have succeeded in doing this; but many
have it as their goal. This identifies opportunities and threats automatically.

Strength of Database Marketing

The Strengths of Database Marketing

Database marketing provides benefits over other forms of marketing that make it the
preferred way of doing business for a growing number of firms.

According to Shaw and Stone, database marketing has the following special strengths.

1. It is measurable. Responses to campaigns are measured, enabling firms to

identify the effectiveness of different approaches.

2. It is testable. Firms can test the effectiveness of different elements of their

approach-the product, the communications medium, the offer (how the product is
packaged to appeal to the customer), the target market, and so on. Tests can be
carried out quickly, so firms can take quick action on the results. Firms can use
test campaign results to forecast sales more precisely, helping them to manage
inventory more effectively.

3. It is selective. Firms can focus campaigns accurately because they

communicate with specific customers

4. Firms can personalize communication to each customer, by including details

relevant to them and not to others. This usually raises the response rate.

5. It is flexible Firms can time their campaign to have their effect exactly when they
want.

Weakness of database marketing

While database marketing provides benefits over other forms of marketing, it also has
some weaknesses, the expenses associated with creating and managing the database.

Firms frequently need to purchase large amounts of computer equipment and hire highly
trained (and expensive) new staff members.
It is also difficult and time-consuming to keep the customer and prospect records up to
date. The appropriateness of the database is only for 2-3 months, after that it needs
update.

81
However, on balance, the benefits far outweigh the expenses and problems associated
with making direct marketing databases a fundamental part of a firm's ongoing business
operations.

Customer profiling

In today’s unpredictable economic climate, it’s important to target markets precisely and
eliminate unnecessary expenses associated with broader marketing, selling, and
servicing. Understanding who your customer is and how to locate them is a critical part
of any business success.
A customer profile is a description of a customer or set of customers that includes
demographic, geographic, and psychographic characteristics, as well as buying
patterns, creditworthiness, and purchase history. Typically, profiling is performed with
the following way:
(1) Demographics: This gives details on characteristics of customers and include age,
gender, race, education, occupation, income, religion, marital status, family size,
children, home ownership, socioeconomic status, and so on.
(2) Geographic: These variables include various classifications of geographic areas,
for example, zip code, state, country, region, climate, population, and other
geographical census data.
(3) Psychographic profiling variables describe customer's life style, personality,
values, attitudes, and so on.
(4) Behavioral: This includes product usage rate and end, brand royalty, benefit
sought, decision making units, ready-to-buy stage, and so on. This information can
be extremely useful for marketing purposes.

Objectives of Strategies
• Improved profitability – database marketing allows a business to segment and
target its marketing efforts in a cost-effective manner, whilst improving efficiency and
profit margins.
• Increase sales – effective database marketing creates more sales by providing
information that allows companies to identify and exploit new market opportunities, as
well as attracting new customers.
• Improves marketing communications – accurate data increases the quality
level of communications with customers’ existing and potential, allowing a company to
massively improve its chances of building lasting customer relationships.

82
• Improve product development – with the successful implementation of a
customer database, a business will be able to gather regular and up-to-date information
that can be used as market research to identify where improvements can be made and
where customer needs are not being met. This information can then be used in product
development through by integrating conclusions derived from the research into the
design of a new product.

Internal and external analysis:

Internal data is information generated from within the business, covering areas such as
operations, maintenance, personnel, and finance. External data comes from the market,
including customers and competitors. It is things like statistics from surveys,
questionnaires, research, and customer feedback.

Research has shown that business analysts consider data generated internally to be
more valuable. According to one survey, “About 65% of respondents rank internal data
as more important than data collected outside the company.”

Both kinds of data are helpful. Internal data helps you run your business and optimize
your operations. External data helps you better understand your customer base and the
competitive landscape. You need a clear view of both, to have truly insightful business
intelligence.

Internal Analysis

Internal analysis of the environment is the first step of environment scanning.

Organizations should observe the internal organizational environment. This includes
employee interaction with other employees, employee interaction with management,
manager interaction with other managers, and management interaction with
shareholders, access to natural resources, brand awareness, organizational structure,
main staff, operational potential, etc. Also, discussions, interviews, and surveys can be
used to assess the internal environment. Analysis of internal environment helps in
identifying strengths and weaknesses of an organization.

Promotional department organization.

Firm’s ability to implement promotional program.

Agency evaluation selection

Review of previous program results

External Analysis

83
Examining the industry environment needs an appraisal of the competitive structure of
the organization’s industry, including the competitive position of a particular organization
and its main rivals. Also, an assessment of the nature, stage, dynamics, and history of
the industry is essential. It also implies evaluating the effect of globalization on
competition within the industry. Analyzing the national environment needs an appraisal
of whether the national framework helps in achieving competitive advantage in the
globalized environment. Analysis of macro-environment includes exploring
macroeconomic, social, government, legal, technological, and international factors that
may influence the environment. The analysis of organization’s external environment
reveals opportunities and threats for an organization.

Consumer behavior analysis

Market segmentation & target marketing

& Market positioning

Database development

Steps in Developing a Database

The most efficient way to narrow options is to look at the advantages of each source
of data. Generally, as the data and information become more tailored to one’s
business its more accurate. But, they also become harder and more expensive to
obtain. Here's a list of common sources of customer information a) Government
reports
City, county, state, and central government all produce demographic reports based
on geography. It can be easily found out (usually for no money).Such information as
how the community has changed over the years and what the government experts
feel trends in major industries will be. The disadvantage is that the data is generic
and tells you very little about your specific customers and prospects.

b) Private reports
There are many companies that provide detailed information on populations based on
PIN code or telephone prefix. Unlike the government data, they will give more precise
information on education level, age, income, average length of tenure in the
neighborhood, type of employment, and other statistics that can help a local business
pinpoint trends that could affect marketing efforts

c) Trade associations

84
 Many trade associations conduct yearly surveys to determine trends in their
industry. However, it is worth checking with them to determine what they do publish.
At the very least one would normally expect that they would produce a trade
directory and, perhaps, a yearbook.
d) Point of sale.
Basic customer information can be obtained from orders and a transaction history
can be built based on the same. Online transactions make things easier as data can
automatically be entered into a database. Technology allows extremely
sophisticated POS (point of sale) information-computerized cash registers can
record the time of day, the exact products purchased, how the customer pays for the
merchandise, and the size of transaction.
e) Employees
For example sale people and customer service department frequently visit and
interact with customers . Have the salesperson sit down with the delivery people.
Have the product engineers sit down with the customer service department.
Suddenly your employees are sharing customer information they didn't even know
they had.
f) Surveys
A survey helps get a fair amount of information by asking details about their profile
(gender, age, etc). Some respondents are reluctant. to give their name but the marketer
can get a clearer picture of overall target customer. They range from very informal
surveys of one or two questions to elaborate telephone surveys conducted by
professional research firms.
g) Focus group:
Face-to-face interaction afforded by in-person focus groups has no substitute Focus
groups are dynamic by following the thoughts and ideas of the consumers, moderators
can stay open to concepts which may not have been predicted. In-person focus groups
ensure that all consumers complete their participation. By doing focus groups in person,
security and confidentiality are ensured and clients can see who their consumers are.
Sources of E-data and what are its uses? Benefits of Database marketing:
Database marketing begins with… data. The more useful data available, the more
effective the campaign. Such data comes from several sources. Many businesses
collect data as part of a typical business transaction. For example, since finance and
insurance companies already must collect name, address, and other information for a
sale, it takes little extra effort to retain this information in a database. Online retailers can
also easily collect such information, as well as purchase histories; offline retailers may
use club-card systems to accomplish the same thing. Additional data comes in from
customer service, which can keep a record of all their customer communications.
Meanwhile, marketing and sales leads create additional customer records.

85
A flat file is one that stores a representation of a simple database, which is known as a flat
file database.

Enterprise resource planning (ERP) refers to a type of software that organizations use to
manage day-to-day business activities such as accounting, procurement, project management,
risk management and compliance, and supply chain operations.

Metadata is defined as the data providing information about one or more aspects of the data; it is
used to summarize basic information about data which can make tracking and working with
specific data easier. Some examples include: ... Location on a computer network where the
data was created. Standards used.

Data mining is the process of analyzing a large batch of information to discern trends and
patterns. Data mining can be used by corporations for everything from learning about what
customers are interested in or want to buy to fraud detection and spam filtering.

86
While data on existing customers can be collected through transactions, data on
prospects is largely obtained (purchased) from third parties. Different countries have
various laws controlling what information can and cannot be sold, often restricting it to
name, address, telephone number, and perhaps some demographics. Many businesses
will readily sell this information to marketers; others may have privacy agreements with
their customers that prevent them from doing so. Occasionally, transaction histories may
also be sold. E.g., When Borders bookstores went out of business, the company sold
customer records to Barnes and Noble, which was then able to market directly to
Borders’ former customers (for example, by offering Barnes and Noble member cards to
th ose who had previously purchases Borders cards).

In addition to third parties, prospect data can also be obtained through sweepstakes,
on-line registrations, and other methods. Larger companies will often manage all the
data they collect from varying sources through a data warehouse. The warehouse
receives diverse data sets from different departments and companies, integrates it into
one mega-database (often several terabytes in size), and then parses it back out into
smaller databases used for various functions. The use of a data warehouse allows a
business to process much greater amounts of data—and again, the more data
available, the more opportunities for finding groups of customers that will respond to a
customized message.

At this point the real work of database marketing is done. Database analysts develop
programs for filtering and mining the data for actionable information. They may segment
customers based upon several different demographic and behavior factors. For
example, they might use RFM analysis—segmenting groups by how recent, frequent, or
how much monetary value customers’ purchases are. They may also use statistical
models, such as logistic regression, to predict future behavior and create customer lists.

Managing Internal & External Data

There are two sources of information from where data for marketing research can be
obtained.

(A) Internal Sources: These refer to the sources of information within the
organization. In certain cases, internal sources are indispensable without which the
researcher cannot obtain desired results. Internal sources include accounting
information (Trading Profit & Loss A/c and Balance Sheets of different years),
salesmen’s reports, statistics in relation to advertisement expenditure, transportation
costs etc. Information from internal sources is easily available and no financial burden is
involved in gathering the information.

(B) External Sources: To study marketing problems in detail the need of external
sources of marketing research arises. External sources are of immense importance and

87
utility in case where research needs detailed and thorough investigation. External
sources data can be divided with two categories (a) Primary data (b) Secondary data.

Primary Data:

This refers to the information collected by the researcher from original sources. It is not
a published data; it must be gathered by the researcher himself by tapping various
resources. Primary data is usually collected for specific purposes.

Secondary Data:

Secondary data is already existing which has been collected and published by some
individuals or institutions. This data is available at a very low cost, and it requires lesser
time to collect it.

(a) Periodicals and Newspapers: Business magazines and journals published

periodically contain data which is very useful for marketing research; Newspapers such
as Economic Times and Financial Express also contain data regarding business trends
and market reports. Important trade journals are Industrial Times, Commerce, Capital,
Market, Indian Finance, Business India, Business World, and others.

(b) Govt. Publications and Reports: There are innumerable publications brought by
Central and State Govts, which contain valuable data for conducting marketing
research. Census reports of the Government of India, Publications of Planning
Commission; periodical publication such as Indian Review, various markets bulletins.
Reserve Bank of India bulletin, publication of the Statistical Departments of various
State Govts., supply valuable information extensively used in marketing research.

(c) Trade Associations: Various trade associations like Chambers of Commerce,

Export Promotion Council etc., publish useful data which is of immense help to the res
warmer.

(d) Published Surveys of Markets: This is another useful source of supplying

secondary data. Market surveys and reports are important instruments in the hands of
researcher for conducting marketing research. These are published by business houses
or independent research organizations. These pertain to specific lines of products.

(e) Foreign Govts, And International Agencies: Publications of foreign Govts,

regarding trade and other important aspects of economy of respective countries and
information published by UNO, ILO, IBRD (International Bank for Reconstruction and
Development) serve useful purpose in making comparison of Indian conditions
prevailing in other countries of the world.

(f) Other Sources: Besides the above-mentioned sources of marketing research,

there are many other sources of supplying secondary data e.g., colleges and
universities stock exchanges and commodity exchanges, specialized libraries’, internal
88
sources such as sales and purchase records, salesman, reports, sales orders, customer
complaints and records of other companies.

The secondary data collected from above mentioned sources suffer from certain
limitations. The basis undertaken by different agencies for collecting data may not be
comparable. In other words, uniform basis may not be adopted for data collection. The
data may be based on incomplete records under secondary source; data is collected for
purposes other than marketing research.

Database management (CASE STUDY POINTERS)

The following are the four main stages to database management:

• Manage the data source.

• Manage the data entry.

• Manage the database.

• Manage the application.

1. Manage the Data Source

There are two main sources of data: internal and external.

External data is defined as that obtained as a compiled list from outside the
company: this could include outside lists, census data, and so on.

Most data are sourced internally.

Direct-contact businesses, where the customer and the business have a direct
interface and a data-gathering opportunity exists, purchase data will be held within
the company.

Companies can gather information from their own customer files, from order and
return records, from sales force contact reports, or from warranty cards, servicing
reports and application forms.

Valuable information can be sourced from questionnaires, either ones that

accompany a product (for example, on a warranty card) or ones that which is include
in the mails.

If a company has no direct contact with customers, it could gather data in the following
ways: List purchase, Data-building schemes and introduce new contact channels.

89
 Marketing wants the data captured to be organized around the ‘customer record’. It
wants customer name and address, number of sales, and products bought and
owned. It wants this kept on a ‘per customer’ basis. But sales and stock control want
the data on a ‘per product’ basis, and in many companies, it is the sales department
that takes the order. Accounting wants the ‘revenue figures’: amount charged and
amount of cash in. Customers? Who are they?

Your last problem could be much closer to home. Within the marketing department,
product managers are interested in customers – but only those who buy their product.
As a direct marketer you are managing customers, not products, but product
managers are targeted on the number of their products they sell and may not be very
co-operative about sharing their data to expose ‘their’ customers to other products the
company sells.

2. Manage the Data Entry:

In most companies, data about customers rarely goes direct from the customer onto
a marketing database.
It may first arrive at the company via sale made and be recorded in the sales ledger.
Details are passed to accounts, and then perhaps on to billing, who send the bills
out. Information goes to stock control, to let them know their stock of the product
bought is reduced by one. Into this data 'merry-go-round' comes marketing.

Stone and Shaw (1988) comment that when processing raw data into the final
marketing database the key is to be structured and disciplined. The data needs to be
uniform and in a useful format for the database applications. The main steps in
managing the data entry are:

Verification

Boddington (1994) suggests that verifying that the data has been put in accurately,
should be a standard procedure.

Marketing could ask for it to be keyed in twice, and if there is a difference, letting the
computer throw up the discrepancy.

Verifying that the data has been put in accurately should be standard procedure. A
common approach is to select records at random for visual inspection and
correction, noting the identity of the original data entry.

Validation
Validation is checking the accuracy of personal and product data provided by the
customer. This could include:

• Checking product/source codes for invalid codes against an internal master list
90
• Address checking can be done using the Postal Address File (PAF)/ ZIP code

• Carrying out audits. These involve counts of customers, and other data entries, and then
comparing these counts to see that they tally.

• Doing a sanity check. Pull off 100 records at random and do a visual inspection. Do they
look reasonable.

These involve counts of customers, and other data entries, and then comparing these
counts to see that they tally.

De-duplication

De-duplication is the act of ensuring that the database does not contain duplicate
records of the same customer. In many ways de-duplication replicates what humans do
in picture puzzles when we are set the problem of 'spotting the ten differences between
one picture and another'.

A special de-duplication program must be run by the computer to ensure duplicate

customer records are kept to a minimum. When adding details of a transaction to your
database, it may be obvious that the new data refers to a customer already on the
system. However, there are several problems in checking the new record against
existing records.

Unless there is an exact match of spelling, conventional record matching will miss the
match and two records for the same customer will result. Different names within the
same household will cause problems. Suppose the husband rang the first time and the
wife the second time, about the same query? A duplicate record may be set up.

When a customer moves to a new house, and then makes a further purchase, they will
quote their name and order number, and new address. The database needs to be able
to spot this and update the old record, not create a new one. De-duplication is the art
and science of attempting to do this. It is not easy, and much effort is spent by database
bureaus in getting this right.

Merge Purge

Merge purge is like de-duplication, but with merge purge you are merging two files,
perhaps two external or one external and your own internal database into one. You
therefore want to make sure you do not have the same customer twice in the final file.
This is sometimes difficult to do, but important, to avoid mailing the same customer
twice. It is also important to make sure that existing customers are not mailed with an
offer aimed at new prospects. An offer of 'How about our Gold Card at no annual fee?'
would not go down too well with existing full-fee-paying customers if it were mailed to
them by mistake!

91
Because de-duplication and merge purge are both long processes (each record on one
file must be compared to all the records on the other file), matchkey systems are used to
speed up the process.

A matchkey is the shorthand key few characters, lifted from the name, address and
postcode, which define the rest of the customer record. Stone and Shaw (1988)
recommend the use of 14-character matchkeys. Matchkeys are compared to see if they
are the same or different. Those that are the same may be output by the computer for
visual inspection.

Another approach used is called 'Soundex' and is used for data taken down aurally. Do
both records sound like each other? If so, one may be erased.

Marketing managers must make a trade-off between the quality of data on the one
hand, and cost on the other. By using bigger matchkeys (more extensive checks) they
will eliminate more duplicate files/ but this will take longer and cost more. It is up to the
individual company to make this trade-off decision.

Saving the rainforests example: I had a mailer recently from my bank. It eventually
reached me after being forwarded by a friend who now lives in a house, I vacated over
two years ago. The mailer offered me a product which I had already taken up from the
bank a while back. The overall impression was one of inefficiency and a lack of any care
being taken. It is likely that proper record verification and de-duplication would have
prevented the bank from wasted mailers such as this.

3. Manage the database:

Once the data has been sourced and entered, it then must be stored on the database
and managed, ready for use. The company first must decide whether to hold the data
inhouse or in a bureau.

In-house or bureau

The decision on whether to manage the marketing database in-house or make

use of an expert outside supplier - a data bureau - will be affected by various
factors. The best course of action is often to set up the database initially in a
bureau. This would allow staff to gain experience while the bureau takes on the
job of managing the data. A move back in-house can be contemplated later.

The advantage of managing database in house is, there can be a customized

approach, it is possible to have a Day-to-day control and the Data can be moved
easily. While the disadvantages are high cost of development, lack of expertise and
handling name and address is difficult.

In the case of managing database by bureau the advantage is, Easier to enforce
service-level agreements, Share costs of hardware and Experience. The
92
 disadvantages are Conflicting demands from other clients, On-line access
sometimes difficult, High operating costs.

The best course of action is often to set up the database initially in a bureau. This
would allow staff to gain experience while the bureau takes on the job of managing
the data. A move back in-house can be contemplated later.
If a decision has been made to keep the database in-house, it is probably the IT
experts who will manage the database on marketing's behalf. In this instance, there
are typically some clashes of perspective within the company, which need to be
recognized and allowed for. These can be summed up as 'people issues'.

Table below summarizes the advantages and disadvantages of in-house versus bureau
management.

Management Advantages Disadvantages

In-House A customized approach is High cost of development of

possible. database.

Day-to-day control Lack of internal expertise

Data can be moved, edited, or Name and address handling is

analyzed easily. difficult. Inexperienced team can
make small technical errors.

Small errors can ruin database

marketing strategies.

Bureau Easier to enforce service-level Conflicting demands from other

agreements. clients

Share costs of hardware as it can On-line access sometimes

be rented. difficult

Experienced and technical High operating costs.

experts to manage and handle
queries.

Auditing
Audit counts should be carried out regularly for record verification. This should
include checking database records against the sources of those records, right back

93
 to the original data capture. It may be that mistakes along the way can be spotted
and rectified.
Archiving

To make decisions about how long to hold records we need to ask ourselves this
question: when does a customer become a former customer? The answer is not as
straightforward as we might think. For a magazine subscription, if your customer does
not renew, then yes, they are now lapsed customers. But in the case of a credit-card
company, this decision is not straightforward. There are many accounts that have not
been used for a while. A decision must be made on the length of time allowed to elapse
before the account is considered dormant. Some data may be completely archived or
destroyed. But marketers also need to decide when to archive customer data for active
communication. The data is then kept, but only used to aid in the analysis / modeling
stage.

4. Manage the applications:

1. Dialogue application: The key area to manage is the accuracy of any data that is
going to get back to the customer. There are few things more irritating to
customers than seeing their name spelt wrongly, and small details like these are
going to reduce the impact of the best thought-through strategies and tactics. The
major areas to consider are as follows:

Selection:
The selection of a customer list from the database is made based on the marketing
decisions made in analysis and strategy. A decision can then be made to select
customers according to their characteristics on the database. This process of selection
needs to be carefully monitored. Some records may need to be suppressed from the
final output.

Outputs are those fields, which are transferred from the database to the communication
material going to the customer. For direct mail this would include address, name for the
salutation (Dear Mr./s...), and personal data such as account information for use in the
letter.

Outputting data can go spectacularly wrong! Marketers need to be careful of items such
as unusual titles, decorations, and qualifications. Sensitive customers can be very
publicly upset if their title is used incorrectly. If no data is available on the title, then
marketers need to decide defaults, for example 'Dear customer', 'Dear Ms ... and so on.

Example: A company that sells flowers once mixed up two lists: one was a list of
birthdays and the other was funeral anniversaries. Unfortunately, the funeral
anniversary people got a letter starting ‘Happy anniversary!’, while the birthday list letter
began ‘On this sad day . . .’! A telecommunications company launched a new product by
94
writing to 1.7 million of its customers. It needed to write only to those customers who
were connected to updated equipment. By mistake, however, the list consisted of those
customers not able to take up the service. When this had been discovered, the
company had to write again to all these people explaining that they had been a bit
hasty, and the service was not quite ready. A simple key-stroke error in the database
bureau cost the company £700k

Applications Of Marketing Databases

2. Customer application: Customer applications are those uses of the database,

which involve the creation and maintenance of contacts and relationships with
customers.

The main customer applications of a marketing database are:

• Direct mail (using the system to select customers to receive relevant mailings).
• Response handling and fulfillment (using the system to record your customers'
responses and manage the next step in the contact strategy fulfillment).
• Telemarketing (using the telephone to manage your customers, by contacting
them or allowing them to contact the company, recording the results of the
dialogue and initiating the required next contact).
• Dealer, distributor, or agent management systems (providing data to them,
helping them meet their customers' needs better, monitoring their performance in
so doing).
• Club or user group marketing (creating an 'inner circle' of your customers, who
receive special additional benefits in return for their loyalty).
• Customer relationship management - managing customers throughout their
period with you, to mutual benefit.
• Consumer promotions (e.g., coupon distribution and redemption, gold, or
platinum cards).
• Business promotions (e.g., sales force incentive schemes, competitions).
• Credit card management (using the system to recruit credit card customers,
record their transactions, invoice them, and promote to them).
• Targeted branding (using the system to deliver branding messages to individuals
identified either as being especially receptive to them or as being at risk from
competitive actions).
• Data marketing (selling or renting the customer data on the system). Any other
dialogue application, i.e., one which involves a sustained series of
communications with a target market.
3. Management application: Loyalty programs, cross sell, Up- sell. (Pl explain these points in
detail. Refer CRM chapter)

95
How Direct Marketing budget is created and how it is applied? Examples of when
and how it’s used.
The information collated and stored on customer databases is used in a vast majority of
ways. Here are few of the most common:
• Calculating customer lifetime value (CLTV) – is a prediction model used in
marketing that can estimate what the lifetime relationship of an individual customer will
be worth to a business. The accuracy of this model and the calculations involved have
become a lot more accurate as the methods involved in database marketing have
improved.
• Recency, Frequency, Monetary Analysis (RFM) – a marketing technique that
is used to calculate the best customers of a business based on a threesome factor; how
recently a customer made a purchase, how frequent they purchase and how much they
spend. The theory that drives the technique’s use is the marketing paradigm that 80% of
your business comes from 20% of your customers. This allows the efforts of the direct
marketers to be specifically targeted to the best 20% of customers. Again, like CLTV,
the accuracy of this technique has improved as database marketing has.
• Customer communications – an example of how database marketing improves
customer communications include using information to personalize correspondence,
making it easier to build up a rapport and, therefore, increase loyalty, customer retention
and sales. Email, despite the perceptions of spam, has become an essential ancillary
weapon in the toolkit of the database marketer, providing the means with which to
instantly communicate with customers.
• Analytical Software – increasingly businesses need to monitor their customers’
behavior across an ever more varied number of retail channels, including websites,
mobile apps, and social media. Analytical software that is combined with their database
can be used to synthesize this information more easily and produce instant reports that
help define a company’s marketing strategies.
• Loyalty programs – database marketing makes it possible for companies to
launch loyalty programs, as they can store data about their sales history. This allows
companies to engage with and reward loyal customers which, in turn, can encourage
customers to choose one business over another.
Chapter 7: Direct marketing market analysis
List
Mailing lists are a powerful way to communicate with existing customers and to
acquire new ones. Traditional direct response mailing lists are sent via postal mail,
but more and more of these lists are being used as electronic email mailing lists,
too. Traditional direct mail lists consist of names, addresses and demographic
information, such as age and income or recent buying habits. Electronic lists
contain a name and email address at minimum and may have a range of
demographic information as well.
96
To direct marketers, ‘list’ is a collection of names and addresses of prospects and
customers who could be the target of an offer to purchase a product or service.

The list selected for direct marketing is a very important factor in determining the
success or failure of any direct marketing campaign. Lists are generally stored in
databases of computers that contain a series of names, address etc. Lists are
important because they are the structured collections of records about customers
and prospects for use in both identifying market segments & ranking customers
based on expectation about how responsive those individuals will be to an offer.

List Compiler / Broker

What do they do?

• capture data from commercial and public sources to create

mailing/marketing lists for database marketing campaigns

• compile lists with multiple data points for entry into marketing databases

• compile databases that can produce marketing/mailing lists based upon

target criteria

• help plan database marketing campaigns, and analyze responses

Types of lists: List selection

1. House list

2. Response list: A. Buyers list. B. Attendee list. C. Subscription list. D. Donors list.
E. Credit card holder list. F. Merged database list.

3. Compiled list: A. Consumer compiled list. B. Consumer Lifestyle Enhanced list.

C. Business compiled list

House list
House lists are simply the databases of an organization. Considered the key asset
of any organization, they include current customers, former customers, and
inquiries (i.e., prospects). Because the house list is so important, it must be
maintained and updated constantly.
97
Response list
Response lists are the house lists of other organizations. They are made up of
individuals with an identifiable product interest and a proven willingness to buy,
subscribe, join, contribute, inquire, or otherwise respond to specific offers .
Response lists are most often used in the consumer marketplace, where customer
files are larger than in the business market. A response mailing list contains
exclusive contacts who have responded to a previous offer from another
company. Since they’ve engaged with previous offers, recipients may be more
likely to do so again.

 Response lists can be broken into several further categories.

A) Buyer Lists

These are lists of individuals who have purchased something direct, through a solo
direct mail offer, a catalog, a print ad, a website, a short form television
commercial
(30, 60, or 120 seconds in length) or an infomercial (10, 15, or 30 minutes in
length).

B) Attendee/Membership/Seminar Lists
These are lists of individuals who have attended a conference, trade show, or
industry event.
Individuals on these lists are likely to respond to offers that closely match their
identified fields of interest.
C) Subscription Lists
These consist of individuals who have subscribed to business or consumer
publications or newsletters. There are two kinds of subscription lists: controlled
circulation and paid circulation. Subscribers are asked to give their name, address,
phone number, job title, job function, size of company, and the type of products
they purchase. Typically, controlled circulation lists are selectable by all these
characteristics.

Paid publication titles often reach individuals with very specific interests. These
lists can be highly responsive if the interests of subscribers are a good match for a
product or service offered. E.g., App subscription list

98
 D) Donor Lists
Fund-raisers use donor lists because they contain the names of people who have
contributed money to charities and nonprofit organizations. Political parties,
special interest groups, religious assemblies, and cause-related organizations all
use these lists. Knowing the source of names (direct mail, email, telephone, etc.)
is important.

E) Credit Card Holder Lists

These names are useful because most credit card solicitations are sent and
responded to by mail, and most direct offers require a credit card.

F) Merged Database Lists

Using the merged list simplifies the selection process because duplicate names are
eliminated; therefore, the list owner can offer the remaining names as a single,
unduplicated list at a higher rental fee.

Compiled Lists
Compiled lists are made up of individuals or companies without any previous
indication of willingness to respond, but with some defined and identifiable
characteristic(s) such as demographics, psychographics, zip code, etc. Compiled
lists offer broad national coverage.
Compiled lists are useful for retail, consumer goods, and business offers where
reaching the right target group is more critical than knowing that they have
previously responded to a direct-response offer.
There are three kinds of complied list: Consumer Compiled Lists, Consumer
Lifestyle Enhanced Lists, Business Compiled Lists

(a) Consumer Compiled Lists

Many consumer product marketers have developed clear pictures of their best
customers. This picture may include demographics and psychographics and may
be limited to specific geographic areas. For example, an automobile manufacturer
may have a clear demographic picture of the buyers of its brand. There may be
differences among purchasers of different models of the brand (e.g., convertibles,
family sedans, and sport utility vehicles). There might be differences in the
popularity of each model in different geographical regions of the country. It is
imperative for this marketer to reach the right target groups. Compiled lists are

99
the only rented lists that would yield broad national or geographic penetration
and pinpoint targeting.

b) Consumer Lifestyle Enhanced Lists.

Sometimes knowing customer demographics is not enough. Many of the large

compilers use syndicated surveys or warranty cards to capture a broad range
of consumer information, including hobbies, persona] interests, pet
ownership, category and brand usage, and additional demographic
information.

This information is usually rented at the household level.

c) Business Compiled Lists.

Business lists, compiled from several sources, contain addresses and phone
numbers and key firm a graphics that describe the size of a company and its
type of business.

PROFILING YOUR TARGET MARKET: PROSPECTING

A key component of successful direct mail strategy is generating a profile of
your target market or “ideal customer,” then selecting lists of people who most
closely fit this profile.
The following selection factors, available on many lists, should be:
(a) Geographic:
Most lists can be segmented by location: state, zip code, country, and
metropolitan area. If you are planning a mailing designed to get businesspeople to
attend a conference in Mumbai, you might mail only to executives located within
a 100-mile radius of Mumbai Maharashtra.
(b) Demographic:
Some lists provide quantitative characteristics of a given population: age, sex,
income level, wealth, race, and other vital statistics of a personal nature. A great
many mailing lists, for instance, allow selection by sex (male or female).
(c) Psychographic:
This segmentation refers to the psychological makeup of your target audience
and is more difficult to identify.
(d) Buying Patterns:
100
 Three important selection criteria for mail order buyers are (RFM) frequency
(how often they buy through the mail), recency (the date of their last purchase),
and amount (how much they spent). Many list descriptions provide a dollar
amount for “average order,” representing the average amount spent by people on
the list. Experience proves that buyers who buy often and spend more are better
prospects than those who buy infrequently and spend less. Also, contrary to what
might seem logical, those persons most likely to respond to a new mail order offer
are those who have recently responded to a previous mail order offer! Therefore
“hot lines” – the segment of a list comprised of the most recent buyers – are
priced higher than the rest of the list.
Business list:
These include job function, title, plant size, industry, number of employees,
annual sales, and types of products purchased.

What is product customization?

Advances in digital and manufacturing technology are now enabling brands to

offer customers the ability to personalize or customize items online or in-store
and then quickly take delivery of them.

The benefit of customization is that it further strengthens the user experience for
the customer by inviting them to become partners in the product creation
process. The better the user experience, the better opportunity for conversions.

Retailers who have a digital footprint that supports customization and

personalization already have a significant competitive edge. To remain competitive
long term, personalization needs to be on every retailer’s technology roadmap.
Right now, Nike is
dominating product
customization and
personalization. The
brand constantly runs
experiments with digital

101
in their flagship stores and partner retailers, with a bent toward in-store or online
product customization. Nike has laid the foundation and is actively selling
personalized products right now both online and off. While most brands aren’t
ready for this level of manufacturing and staffing coordination, they need to see
the writing scrolling by on the wall. Digital is already changing the retail
experience and the products purchased in retail stores.

A better, more personalized experience

The trend toward digital customization may start with products but it does not
stop there. Digital also connects the experience a customer has in-store with a
brand site to the continued brand relationship, by providing that customer with
more interesting content and follow-up offers based on their past interest and
purchasing behavior.

Anticipating future needs

Digital also enables the collection of data that, when analyzed and acted upon,
enables brands to continuously improve the customer’s experience. Customer
reviews online, customer service data, and social media conversations can give
you an indication of issues. However, to reveal any issues that don’t show up
online, consider including customer service in the feedback loop.

➢ Response modeling and experimentation:

➢ When you are running a marketing campaign, it is not always possible or even
desirable to target your entire customer base. A first obvious reason is limited
marketing budgets: sending out irrelevant campaigns to uninterested
customers is a waste of money. Moreover, some customers might even get so
annoyed that it creates an adverse effect towards your product, brand, or
company.
➢ Hence, it would be ideal if we could send out the marketing message only to
those customers who really benefit from it. The analytical solution to this is

102
 called response modeling. The goal hereby is to develop a classification model
(e.g., logistic regression or decision tree) that selects the customers who are
most likely to respond and act. Put differently, response modeling focuses on
deepening or recovering customer relationships using analytically based
models.
➢ Various types of responses can be considered. Assume we invested in an email
marketing message or a Facebook Ad which has a fancy title together with a
link to your website. The response can now be qualified in various ways. More
specifically, we can make a distinction between a soft response and a hard
response. Seeing the ad could be a first type of response that is of interest
since it will create product and/or brand awareness. A next type of response
would be someone clicking the link. This already illustrates more engagement
with your offer. Responses may then come in a variety of forms. Examples are
opening a web page or pdf with a product description or leaving your contact
details together with a request for a price quote. These are all examples of soft
responses with increasing interest in your message and offer. The ultimate,
hard response would be a product or service purchase. Hence, as a first step in
response modeling, the data scientist needs to discuss with the business expert
what target (e.g., ad impression, click link, pdf download, or actual purchase)
needs to be modeled.
➢ Once the response target has been appropriately defined, the historical data for
analytical modeling need to be gathered from previous marketing campaigns to
properly understand customer response behavior. Popular examples of data
that might be useful are:
➢ Demographic variables (e.g., age, gender, marital status, employment status) ➢
Relationship variables (e.g., length of relationship, number of products
purchased) ➢ RFM variables (see above).
➢ Social network information (e.g., purchase behavior of friends, product reviews
from friends)
➢ All the above data elements can then be gathered into a dataset to build your
analytical response model. Given the multitude of predictors available, it will
be important to perform variable selection to make the model compact and
powerful.

103
➢ Various analytical techniques can be used for response modeling such as
logistic regression, decision trees, neural networks, and random forests. In fact,
many companies feel comfortable using black box analytical models (e.g.,
random forests, neural networks) for response modeling since their primary
goal is to find out who will respond rather than understand why customers
respond. Note that besides classification, response modeling can also be
approached from a regression angle, whereby the aim is to build a regression
model predicting the amount (or intensity) of the response.
➢ Site traffic/ store traffic:
Website traffic refers to web users who visit a website. Web traffic is measured
in visits, sometimes called "sessions," and is a common way to measure an
online business effectiveness at attracting an audience.
In general, however, most websites will start to see some traffic from Google
very shortly after they launch – usually in days, a week or two at the latest.
Remember, though, that success does not lie at the start of your SEO journey,
but instead by continuous improvements that increase traffic numbers over
time. Offline marketing efforts are a great way to increase the amount of direct
traffic your website is getting. Consider promoting your website through
methods such as print advertising, coupons, business cards, brochures, or
commercials.
Store traffic is the number of people who go into a store. It depends upon
offers given to consumers, store looks, keeping the store updated and
merchandised updated as well. Foot traffic is one of the most essential
measures when it comes to running a store. More traffic means more
opportunities for sales and customer engagement, which in turn leads to higher
revenues. Measuring foot traffic gives you tons of insights about several
aspects of your store including how well your marketing efforts are working.

What is Fundraising?
Fundraising is the process of collecting money as donations, for a cause from
individuals and businesses. A person who raises the money from them is known
as a fundraiser.
It was usually used to gather money for non-profit organizations, but over the
years fundraising has evolved a lot and it is now used to fund various important
causes.

104
These causes may include anything, from helping the underprivileged to raising
funds for one's education. Traditional fundraising happens offline whereas the
modern-day crowdfunding happens online. Few types of fund raising are:
Capital campaigns: These are limited campaigns which are bound by time for a
particular project. As these are time-specific, they require a good amount of
preparation and clever execution, that is the reason why many non-profits do
this.
Corporate support: As the name suggests, this is charity giving by a corporate
company to an organization. The organizations involve NGOs and other
nonprofits. Non-profit’s approach corporate companies and explain them their
mission. Few corporations contribute to their causes either from a set budget
or their foundation.
Online Fundraising: This method is one of the easiest ways to raise funds for a
cause. As it is online, it can reach a larger audience which might be physically
impossible. Most non-profits in India are not leveraging the power of online
fundraising.
Membership Campaigns: This is one effective way of gathering people to know
more about your organization and the work that you do. Bringing in members
enhances the chances to rake in more funding for your campaigns as most of
the members get converted to donors in a short period.
Special Events: Raking in funds to support a cause from special events can
prove to be the most efficient way as you not only get funds but, increase
awareness about your brand and the importance of the cause. Many artists,
like Justin Bieber, Coldplay support few charities, and they organize charity
concerts to contribute a certain share of their earning for charitable purposes.
Pre-sales and Post-sales:
Pre-salespeople help in answering the queries or technical questions and can
demonstrate products. If they can show a prospect of how the product will help
them, then this helps in making the sale with ease. Post-sales are also
important especially for customer support, retention, and good service. Pre-
sales determines what is needed and then explains how a product or service
can solve a problem.
Create a sales page. Share what you are offering — be clear that this is a
presale, and your product is not built yet. Provide an overview of the product
and a visual if possible. Include a call to action — share what you want the

105
potential customer to do, why it is important to you, and what they will get out
of it.
For e.g., in pre-sales of software, this typically involves a technical person that
teams with a direct salesperson. The pre-salesperson is the person that
addresses all technical questions and usually performs a product
demonstration.
In post-sales this is usually either a project manager, or a customer support
person. Now that the customer has made the purchase, they want to know
that they will receive what they paid for and/or that they will receive the
proper support from the vendor. This is a great opportunity for a provider to
get a project off on the right foot. It can also act as part of the process of
setting the proper expectation from the client.

106
Direct Marketing Techniques
• Direct Mail
• Telemarketing
• Direct Selling (Face to Face Selling)
• Email Marketing and Internet
• Catalogs

❖ Direct Mail
• Direct mail is method of Direct Marketing in which advertisers mail printed
advertisements, letters or brochures, pamphlets, catalogs, free trial CDs etc to large
groups of consumers.
• The term "direct mail" is used to refer to communications sent to potential customers via
the postal service and other delivery services.
• Direct mail is sent to customers based on criteria such as age, income, location,
profession, buying pattern, etc.
• Bulk-mail or Mass mail is used to lower the cost of the mailing, and targeted mailing lists
are used to maximize potential response.
• Advertisers find direct mail appealing for a number of reasons. It takes their message
directly to the consumer.
• While consumers might walk away from a television advertisement or flip past a
newspaper advertisement, they do check their mails.
• Advertisers also like that they can direct their message as narrowly or broadly as they
want.
• By receiving the mail at home, direct mail puts the advertiser's message in the hands of
the consumer at the time the consumer might be likely to read it, along with the rest of the
mail.
❖ Telemarketing
• Telemarketing is method of marketing a product/service over the telephone.
• Most telemarketing calls are "cold calls," meaning the recipient of the call has not
requested that the telemarketer contact them.
• Telemarketing is one of the most controversial types of marketing.
• The most successful telemarketing service providers focus on generating more "qualified"
leads that have a higher probability of getting converted into actual sales.

❖ DO-NOT-CALL REGISTRY Service, India

• The Telecom Regulatory Authority of India had announced the Do-Not-Call Registry in
India in 2007. As per TRAI’s guidelines, primary objective of the National

107
• Do Not Call Registry (NDNC Registry) is to curb Unsolicited Commercial
Communication (UCC). UCC has been defined as “any message, through
telecommunications service, which is transmitted for the purpose of informing about,or
soliciting or promoting any commercial transaction in relation to goods, investments or
services which a subscriber opts not to receive”
• In the next phase of implementation, tele marketing companies will have to get their
calling list scrubbed through the NDNC module; and telemarketers will be able to call
only those numbers which are cleared by the NDNC registry.
• Surprisingly, within 5 days of launch, 14,750 telemarketers having around 4,50,000
telephone lines have put in their applications for registering with the Government to
comply with the National Do-Not-Call (NDNC) Registry guidelines.
❖ Direct Selling (Face to Face Selling)
• Direct selling is a channel of distribution for the marketing of products and services
directly to consumers.
• Direct sellers are not employees of the company.
• They are independent contractors who market and sell the products or services of a
company in return for a commission on those sales.
• Examples of direct selling include categories like cosmetics (Avon, Amway, Oriflame),
Wellness products (Amway), clothing, etc.
• Eureka Forbes had made history in India by successfully marketing their vacuum
cleaners through door-to door selling.
❖ Email Marketing and Internet
• Email marketing is a method of direct marketing which uses electronic mail (email) as a
means of communicating advertising messages to their audience.
• It refers to the promotional mails to new or existing customers by sending direct emails or
newsletters.
• It is widely used as it is much more cost effective than most other forms of
communication.
• A tool for building relationships with both existing and potential customers.
• A practical, low-cost marketing tool that combines convenience with technology.
• It provides small business owners with the ability to reach more customers, which in turn
can result in increased sales.
• Most business owners today use email marketing campaigns to promote all sorts of
services and products, from babysitting services to mobile phones and beyond.

108
 ❖ Catalogs

• Catalog marketing is a direct selling method in which products from several marketers, or
several products from the same seller, are presented to prospective buyers via mail or
internet
• A catalog is usually self expressive, giving details of the product like the color, the size,
the shape, the price, the applicability etc.- the brand image and other related facets are
critically and logically analyzed.
• Big retail outlets like Hypercity, Big Bazaar, Croma etc. extensively use catalog
marketing to share information about their products.
• Catalog marketing is a specialized branch of direct marketing.
• The two disciplines share many of the same characteristics.
• Like direct marketing, catalog marketing is based on interactivity, or one-to-one
communication between the marketer and the prospect or customer.
• Catalogs always include response devices, and catalogers can measure the response to
any and every mailing they make.
• It is safe to say that most at-home shopping takes place through catalogs.
Types of Catalogues
• The three major categories of catalogs are business-to-business catalogs, consumer
catalogs, and catalog showrooms
• Business-to-business
• Consumer catalogues
• Showroom Catalogues

❖ Business-to-business catalogs
• Business-to-business catalogues are those that provide merchandise to be used during
business, including everything from office supplies to computers

109
 • In industrial settings business-to-business catalogues are used to sell everything from
heavy machinery to hand tools.
• Business-to-business catalogues are mailed to individuals at their place of business, with
most purchases being made on behalf of the business rather than the individual.

❖ Consumer catalogs
• Consumer catalogues are mailed to consumers at home. In her book on catalogue
marketing, Katie Muldoon identified eight types of consumer catalogues.
• Unaffiliated catalogues are stand-alone ventures whose primary purpose is to sell
merchandise by mail.
• These independent cataloguers are not affiliated with any retailer or manufacturer.
• While the stores of unaffiliated cataloguers were originally designed to sell only
remaindered and unsold merchandise, some successful independent cataloguers
have opened their own retail outlets to take advantage of the consumer recognition
their catalogues have built

❖ Catalog showrooms
• Catalog showrooms are a category of consumer catalogers who combine retail
marketing with catalog marketing. A catalog showroom is essentially a retail outlet.
• The catalog, usually quite large, serves primarily to build traffic in the showroom.
• The trend in catalog showrooms has been to de-emphasize the mail-order aspect of
the catalog and present the showroom as a retail outlet with the added benefit of
being able to place catalog orders from the showroom.

➢ Kiosk Marketing
• The word kiosk was originally taken into English from Turkish, in which its source
köşk meant "pavilion."
• A kiosk is a small booth like structure used to showcase products or services to
customers.
• They are mainly used for promotion of a product or service. It has been used widely
by players in retail, tourism and insurance industry.
• Indian Railways make information access easier for their customers by use of
Interactive kiosks placed at all their railway stations.

Chapter 8
Various methods of direct marketing
Direct marketing is any marketing campaign, online or offline, that requires a response
from prospects. The lead generation has following methods: (Case study pointer)
110
o One step: when your offer is simple and straightforward you can send one
communication. It is for a quicker sale. No follow-up needed. No salespeople to
pay for. Make a strong proposition, provide plenty of ways to buy, give a help line,
email address or phone number. The one-step can only be used with certain
products – products which can, in fact, be sold by a mail-order package, email,
flyers in newspapers etc. e.g., D Mart, Shoppers stop
o Two-step: It is usually more than two steps, or multi step. when your product or
service is complex, innovative, new, or very expensive it is usually more of a
challenge to sell. The first part of a two-step campaign makes a powerful offer and
persuades hot prospects to apply for more information. The second bit delivers
responders all the info they need to make a buying decision. Sometimes customers
need to meet with sales representatives perhaps for a demonstration,
presentation, or consultation. And they will need to see a proposal or estimate
before they buy. E.g., Jeep Cherokee, Amazon pay.
Examples o One step: You receive a mailed offer. It includes an application form and
reply envelope, order line ‘phone number and details of how to apply online.
o Two step: You get an enticing email that includes a link to a landing page. You fill in
a form on the landing page, which you enter to find out more before you buy
Share. E.g. Disney Go
Tools / techniques of Direct Marketing

1) Face to Face Selling is the oldest form of direct marketing or simply marketing in
which the authorized salespersons are employed by the organizations who meet the
prospects directly.

2) Telemarketing is that form of direct marketing in which telephone is used for the
purpose of communicating with the customers buys the products directly from the
sellers. Telemarketing is further divided into the following two types.

• Outbound Telephone Marketing

• Inbound Toll Free

Outbound Telephone Marketing is used to sell the products directly to the customers
by calling them on the telephone.

Inbound Toll Free: orders are received from customers on the telephone because of
ads on television or radio etc.

3) Direct mail: " This form of direct marketing includes direct mailer in which an
offer, reminder, announcement or other things are sent to the address of a potential
customer or donors via the postal service and other delivery services. Direct mail is sent
to customers based on criteria such as age, income, location, profession, buying pattern,
etc. Direct one to one Communication takes place in direct mail marketing.

111
4) Catalogs are mailed to a specified list of customers or provide physical catalogs
to a group of people at stores to sell particular products. A catalog is a combination of
at least eight printed pages which includes details of multiple products along with
the identification of direct ordering mechanism. A complete line of goods is
offered through catalogs by some stores.

There are three types of catalogs Business-to-business, Consumer catalogues and

Showroom Catalogues

5) Direct Selling (Face to Face Selling): Direct selling is a channel of distribution

for the marketing of products and services directly to consumers. Direct sellers are not
employees of the company. They are independent contractors who market and sell the
products or services of a company in return for a commission on those sales such as
cosmetics (Avon, Amway, Oriflamme), Wellness products (Amway), household wares
(Tupperware) clothing, etc. Eureka Forbes had made history in India by successfully
marketing their vacuum cleaners through door-to door selling.

6) Email Marketing: is one of the latest method of direct marketing which uses
electronic mail (email) as a means of communicating advertising messages to their
audience. Email Marketing refers to the promotional mails to new or existing customers
by sending direct emails or newsletters. It is widely used as it is much more cost
effective than most other forms of communication

It is not only cost effective, convenient, and practical with technology for building
relationships with both existing and potential customers. It provides small business
owners with the capacity to reach more customers, which in turn can result in increased
sales.

112
7)Kiosk Marketing: The word kiosk was originally taken into English from Turkish, in
which its source kiosk meant "pavilion." A kiosk is a small booth like structure used to
showcase products or services to customers. They are mainly used for promotion of a
product or service. It has been used widely by players in retail, tourism, and insurance
industry. Indian Railways make information access easier for their customers by use of
Interactive kiosks placed at different locations such as malls, stores, banks, airports,
railway stations etc. 8) Direct response print

Direct-response magazine and newspapers space advertising must ask the reader
to do something. To make a sale, the advertisement must present enough
information to stimulate a purchase decision or generate an inquiry, which will be
followed up by mail or a personal sales call. e.g., Asian Paints, Berger Paints,
McDonalds, Dominos, Outlook, The Week. Magazines and newspapers that contain
a heavy volume of direct-response advertisements usually outperform those that do
not have many such advertisements. This is probably true because magazines or
newspapers have readers with a positive attitude toward direct marketing activities.

Types of catalogs
The three major categories of catalogues are business-to-business catalogues,
consumer catalogues, and catalogue showrooms

1. Business-to-business
2. Consumer catalogues
3. Showroom Catalogues

Business-to-business catalogues
113
Business-to-business catalogues are those that provide merchandise to be used in
the course of business, including everything from office supplies to computers. In
industrial settings business-to-business catalogues are used to sell everything
from heavy machinery to hand tools. Business-to-business catalogues are mailed to
individuals at their place of business, with most purchases being made on behalf
of the business rather than the individual.

2) Consumer catalogues.

Consumer catalogs are distinguishable by the types of items they carry, the target
markets they want to reach, and the quality of their appearance and design. While
some consumer catalogs are designed to generate retail store traffic, the majorities
are from firms that concentrate almost exclusively on catalog sales. The specialty
catalogs, which carry items ranging from clothing to food, are designed to cater to
specific tastes associated with lifestyle preferences, including differences in
interests, activities, attitudes, and values. e.g., Tour operators, Titan, Tanishq, Hyper
city. e.g., consumer catalogue on women’s handbags.

pdf-catalog-demo-a dv-en.pdf

3) Show room Catalogues

Catalog showrooms are a category of consumer catalogers who combine retail

marketing with catalog marketing. A catalog showroom is essentially a retail
outlet.

114
 The catalog, usually quite large, serves primarily to build traffic in the showroom.

The trend in catalog showrooms has been to de-emphasize the mail-order aspect of
the catalog and present the showroom as a retail outlet with the added benefit of
being able to place catalog orders from the showroom. The retail outlets do not
keep all the products for display in the store rather they prefer to keep online
catalogues or huge printed catalogues of the products in the store, so the
consumers can select from those catalogues. E.g., Furniture outlets, home
furnishing.

Advantages of Direct mail

The term "direct mail" is used to refer to communications sent to potential customers or
donors via the postal service and other delivery services. Direct mail is sent to
customers based on criteria such as age, income, location, profession, buying
pattern, etc.
Mail-order business, also called direct-mail marketing, method of merchandising in
which the seller’s offer is made through mass mailing of a circular or catalog or through
an advertisement placed in a newspaper or magazine and in which the buyer places an
order by mail. Delivery of the goods may be made by freight, express, or parcel post on
a cash-on-delivery basis. Retail mail-order selling was developed primarily for rural
customers, but it now includes millions of customers in urban areas. Most mail-order
businesses have been small specialty firms selling by the traditional method, but
department stores also do a significant volume of business through their mail-order
divisions. Most mail-order volume, however, is accounted for by a few firms selling
general merchandise lines. With the development of computerized mailing lists and
techniques after about 1960, many large retailers combined mail-order circularizing with
billing.

115
Quick to produce. You can prepare and mail a small promotion within days or weeks.
Direct mail is perfect for quickly testing prices, offers, and potential audiences. You have
complete control over the media, the audience, and your offer.

Quicker response. Not only is direct mail quicker to prepare, but response time to
direct mail is usually quicker as well. You can project the final results of a mailing quickly
and accurately. You can build an advertising campaign with more confidence by testing
small lists, then building to larger lists.

Highly targeted. Using carefully developed lists, you can target your mailings more
selectively than you can with most other media. You can reach almost any market
segment, buyer profile, or area of the Treasure Coast you feel is most appropriate for
your business.

Less competition. Your advertising message does not have to compete with other
advertising messages. And your competitors are less apt to know your current strategy.

More personal. Not only can letters be personalized via mail-merging techniques, but
you can use more informal language in writing your letter and you can direct your letter
to the specific interest of the reader.

Enhance newspaper advertising. Build on customer awareness by complimenting

your print advertising with the impact of targeted mail.

Easy to respond to. The inclusion of an order card and return envelope makes it
convenient for the consumer to respond to direct mail.

List of loyal customers. Direct mail allows you to build and maintain a list of prime
prospects for your future direct mail campaign. e.g.

Promoting its new range of environmentally friendly e-bikes to keen cyclists, Smart thought
out of the box. One of their best direct mail marketing campaigns involved a helmet, made
from recycled cardboard, for their targeted customers to assemble. The example of direct
mail marketing also encouraged cyclists to wear a helmet.

116
Scope of telemarketing: (first explain the need and significance of telemarketing
and then scope of telemarketing)

Need and significance of telemarketing: Telemarketing industry continues to grow for it has a
significant impact on lead generation as it creates a wide range of options and opportunities for
targeted customers. It is the right way of testing new products and can be a fast way of acquiring
new customers.

Besides being useful, it will cost you less money because of the many benefits associated with it.
One fact is that you no longer must train employees. It is the telemarketing company's job to
produce trained and dedicated telemarketers. Training sessions include familiarity with products
or services, proper call handling, quality calling skills, rejection handling, and many other
telemarketing tips.

The main benefit of using telemarketing for your campaign and promoting your business is that it
allows you to immediately measure your customers’ level of interest in your products or services.
It will be easy for you to find new customers and is an excellent way for you to follow up with
your existing customers to keep them interested in your new offers for your products or services.
It is a significant advantage for your business to gain more potential sales opportunities. In
telemarketing, you can analyze, measure and report individual concerns to provide a detailed
view of your campaign's success by tackling points of improvement

Telemarketing involves the use of the telephone and calls 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.
It can be an important part of an integrated marketing communication program. The
telemarketing objective is to reach customers in a personalized, cost-effective
interaction that meets customer needs.
A well-planned telephone marketing program is a carefully thought-out and
controlled activity in which the persons called have been identified as actual or
potential members of a firm's target market; thus, telemarketing helps build and
maintain satisfactory customer relationships. E.g., Automobile companies and insurance
companies.
Telemarketing has gotten a bad reputation because of all the spam calling that has
happened over the years. Telemarketing, when done correctly, is a top five B2B lead
generation tactic.
A successful telemarketing campaign will start with a three step process:

• Define campaign objectives

• Set strategic but realistic goals

117
 • Create a call script that aligns the value of the product or service you are selling
with the target demographic or psychographic

The most effective telemarketing programs make use of the latest technologies,
including communications hardware and software, particularly database technologies.
The scope of telemarketing is limited only by the imagination of the direct marketer.
Although no other marketing tool can match the cost-effectiveness, flexibility, control,
and speed of the telephone, it takes more than just good telephones to get good
results.
A telemarketing firm must have qualified telephone operators who have been well
trained in the use of the telephone as a marketing tool.
This includes training in proper voice inflections, listening skills, persistence, and
patience.
Companies use call centers for inbound telemarketing (receiving calls from
customers) and outbound telemarketing (initiating calls to prospects and
customers). e.g., ICICI, Citibank, HSBC, Vodafone, Airtel
In fact, companies carry out the following types of telemarketing: •
Selling, including outgoing and incoming callings
• Setting qualified appointments.
• Generating lead advertisements
• Surveying.
• Providing customer service.
• Advertising (Public Relations) Pursuing collections.

Introduction to marketing mix

Four elements of marketing mix
❑ Product
❑ Place
❑ Promotion
❑ Price
Fifth ‘P’ of marketing is:
❑ packaging

Features of marketing mix

• 1. The four elements of marketing mix are co-equal, interdependent, and essential.
• Eg., Depends upon the product the other three factors will change.
118
 • Marketing mix is very useful in achieving the marketing objectives, i.e., sales, profit
and customer satisfaction.
• Marketing mix is a flexible and dynamic concept. The components could be adjusted
to meet the competition in the dynamic market environment.
• Eg., Nirma washing powder packed in a pouch and sealed at the top without
sophisticated packaging has been well accepted in rural areas even in the face of
intense MNC competition.
• Marketing manager acts as mixer of all marketing ingredients, and he must use his
knowledge, skills and experience in developing optimum marketing mix.
• The concept of marketing mix is applicable to business/ profit and non-business/
nonprofit organization.
• A thorough understanding of the customer is common to all the four elements. The
focus points of marketing mix is the customer, and the marketing mix is expected to
provide maximum customer satisfaction. e.g., in the case of products like water
purifiers, computers, etc. after sales service plays an Important role in customer
satisfaction.

Aspects of marketing mix

• They are broadly divided into two:
• 1. The markets
• 2. The products

➢ Markets:
• The business is affected due to economic, social and political environment which is
beyond the control of the management. So, the company must formulate its policies
according to business environment. The forces could be:
• 1. The policies of the govt. regarding oil, direct and indirect taxes, foreign exchange,
etc., are to be considered while finalizing marketing program. E.g., Tesla was not
ready to come in Indian markets because of Foreign policies of India. In the year of
1976-77 Coca-Cola left Indian market due to Indian policies.
• 2. Consumer behavior is affected by number of factors: education, income, beliefs,
age group, industrialization, occupation, attitude, beliefs, values, customs etc., affect
the demand for the product.
• 3. Competition affect both the demand and prices of the product and the marketing
manager must prepare the marketing mix to meet the competition. E.g., if one brand
lowers the prices the other brand also feels the pressure of lowering the price.
Amazon gives discounts during Indian festivals.
• 4. Trade factors such as channels of distribution, trade practices, the motives and
assumptions of the distributors, service provided by the intermediaries etc., requires
careful examination while developing marketing mix.

119
 • E.g., Tupperware’s distribution happens through agents. Amazon has distributors
and warehouses.

➢ PRODUCTS

1. Product planning: provide

product or service to the 2. Branding: Must take decision
product includes type, quality, regarding the branding policies,
Factors related to products: and design of the product. branding promotions, and
Coca-Cola has different trademarks
products in different countries.
3. Packaging: management
must decide about type, quality
and design of packaging. E.g.,
Milkmaid’s packaging helps to sell
more products and gave
recipe to make desserts.

• Distribution: channel of distribution, physical movement of stocks, financing etc.

• Personal selling: activities will have an impact on the formulation of marketing mix.
E.g., Eureka Forbes still uses personal selling as one of the methods of marketing.
• Advertising: strategy, media, methods, cost, etc., It is the costliest marketing
method.
• Sales promotions: sales promotion includes activities such as demonstrations,
displays, dealer programs, that stimulates purchases by consumers.
• Marketing research: involves systematic gathering, recording and analyzing of data
about problems connected with product, pricing, and distributing.

4 p’s of marketing mix

• In the 1950s Neil Borden popularised the term marketing mix which
contained more than ten elements of marketing. The fundamental
among them was the 4 Ps of marketing. The very purpose of marketing
is to make your promising customers aware of your products. A
marketing mix is the set of those factors which a company can leverage
to make the consumer purchase its products.
• Marketing mix usually refers to the set of 4Ps viz. Product, price,
Promotion, Place. But theoretically, the marketing mix is a much
broader term.
120
❖ Product:
• A product is the heart of the marketing mix. All marketing activities
begin with the product. The product is not a physical entity alone; it
captures the whole tangible and intangible aspects like services,
personality, organization, and ideas.
• Without a product, we have nothing to price, promote or place. Hence,
of all the 4 Ps the Product is the most important element.
• Here, it is essential to understand the term product mix concerning
marketing. The product mix is the whole range of products a company
offers to its customers. The decisions regarding product mix will depend
on many factors like:
• Design, Features, Brand name, Product variety, Quality, Services,
Packaging, and returns, etc.

❖ Price
• Price is the monetary value that has to be paid by a customer to acquire
or own the product of a company. It is the critical revenue-generating
component of the firm.
• Pricing decisions should be taken with great care, as it is a double-edged
sword. If your product is priced too high, it may convey a feeling of high
quality or overpriced. At the same time if the price is low, it may send a
message that your product is cheap and not of good quality. If it is high
priced it will make your product placing to limited and standard stores.
So the marketer must know the art of wielding this dangerous sword of
pricing.
• The pricing mix decisions need to consider the below marketing
variables: Methods of pricing are:
• Allowances to wholesalers, retailers, (promotional or end of season)
Discounts, agents (Tupperware)
• The pricing strategy of your organization must align with the overall
goal of your organization to blend smoothly.

❖ Promotion:
• It aims to serve two objectives. One, it informs the potential customers
about your product and secondly, it persuades them to buy your product.
121
 The promotion mix will thus include the various means that you can use
to communicate with the target audience. An effective promotion mix will
ensure good sales and a marketer must strive to create a conducive
environment.
• The main elements of a promotion mix are:
• Advertising, Personal selling, public relations, Direct marketing,
Publicity -social media, print, etc., Sales promotion
Examples
• Shopify understands that many of its prospective users have never
considered monetizing their hobby or craft products or opening their
own ecommerce store. However, that is precisely what makes this ad so
compelling. Shopify knows its audience, and so goes after first-time
ecommerce craft retailers with this tempting positioning
• Imagine it – someone who’s been making scarves for years, whose
family and friends are always telling them, “You should sell these! sees
this ad. They reflect for a moment, before thinking, “Y’know what? I
should sell my scarves!” At this point, they have already bought into
Shopify’s message, and may begin exploring getting started with the
platform.

❖ Place:
• Place or physical distribution deals with the transfer of ownership of the
product from the manufacturer to the customer.
• The margin of your profit depends on how quickly you can turn over
the goods. The more swiftly the products reach the higher sale, the more
likely are the chances of satisfying the customers and increase brand
loyalty. Hence the Place factor is crucial in ensuring your product’s
competitiveness in the market.
• The following are the elements of a distribution mix:
• Channels of distribution (wholesaler, retailers), Transport, Order
processing, Coverage- rural or urban market

Marketing plan
1. Situation analysis covers external and internal factors including
competition analysis.
122
 2. Marketing objectives to match the marketing opportunities in a
competitive marketing.
3. marketing strategy providing market segmentation and marketing mix
involving product, price, promotion and place 4. implementing marketing
plans.
5. monitoring marketing plans to achieve accomplishment of marketing
objective and results in terms of customer satisfaction and profits.

Payment, Security in E-Commerce , Integration of Direct Marketing & ECommerce

through social media

Features of e-commerce/ e payment

• Acceptability:- The payment infrastructure should not only be robust
but also available and accessible to a wide range of consumers and
sellers of goods and services. The value stored in the electronic cash
should be honored and accepted by other banks and financial
institutions for reconciliation.
• Reliability:- Users and businesses want a payment system that is reliable
because the availability of services and smooth running of an enterprise
will depend on the availability and successful operation of the payment
infrastructure.
• Security:- Digital currency should be stored in a form that is resistant to
replication, double-spending, and tampering. At the same time, it should
offer protection from the intruders trying to tap it to unauthorized use,
when transmitted over the internet.
• Flexibility:- Payment systems should be able to accept several forms of
payment rather than limiting the users to a single form of currency.
• Anonymity, privacy:- This characteristic refers to the desire of users to
protect their privacy, identity and personal information. In some
transactions, the identities of the parties could be protected by anonym
it.
Different type of payment system:
• Credit card: Payment using credit card is one of most common mode of
electronic payment. When a customer purchases a product via credit
123
 card, credit card issuer bank pays on behalf of the customer and
customer has a certain time period after which he/she can pay the credit
card bill. It is usually credit card monthly payment cycle.
• Debit card: A debit card (also known as a bank card, plastic card or
check card) is a plastic payment card that can be used in place of cash to
make purchases. It is like a credit card, but unlike a credit card, the
money for the purchase must be in the cardholder's bank account at the
time of a purchase and is immediately transferred directly from that
account to the merchant’s account to pay for the purchase.
• A smart card is a physical card that has an embedded integrated chip
that acts as a security token. Smart cards capable of short-range
wireless connectivity can also be used for contactless payment systems;
they can also be used as tokens for multifactor authentication. Smart
cards can provide personal identification, authentication, data storage,
and application processing.
• E-cash is a form of an electronic payment system, where a certain
amount of money is stored on a client's device and made accessible for
online transactions. Stored-value card — A card with a certain amount
of money that can be used to perform the transaction in the issuer store.
e.g., electronic fund transfer.
• The e-cheque method was deliberately created to work in much the
same way as conventional paper cheque. An account holder will issue an
electronic document that contains the name of the financial institution,
the payer's account number, the name of payee and amount of cheque.
e.g., money transfers directly from your bank account, through your
PayPal account, into another user's PayPal account.
• eWallet is a prepaid account that allows you to perform transactions,
both online and offline, via your computer or smartphone. It works as a
fast mode electronic wallet that allows you to perform transactions from
the comfort of your home. E.g., Paytm, American Express, Apple pay.
• Electronic funds transfer is the electronic transfer of money from one
bank account to another, either within a single financial institution or
across multiple institutions, via computer-based systems, without the
direct intervention of bank staff. NEFT (National Electronic Fund
Transfer) RTGS (Real Time Gross Settlement. IMPS (Immediate
Payment Service) UPI (Unified Payments Interface)
124
Lack of trust in the privacy and eCommerce security: Major issues
• Theft of clients’ data– The eCommerce industry is full of cases where
criminals have stolen the personal information of customers, such as
addresses and credit card details.
• Damages to networks of computers– attackers may damage a
company’s online store using worm or viruses' attacks.
• Malware, viruses, and online frauds: these issues cause losses in
finances, market shares, and reputations. Additionally, the clients may
open criminal charges against the company. Hackers can use worms,
viruses, Trojan horses, and other malicious programs to infect
computers and computers in many ways.
• Uncertainty and complexity in online transactions : Online buyers face
uncertainty and complexity during critical transaction activities. Such
activities include payment, dispute resolution, and delivery.
• These fraudulent programs may: hijack the systems of computers, erase
all data, block data access, forward malicious links to clients and other
computers in the network.
Payment gateway: process
• A payment gateway is a technology used by merchants to accept debit or
credit card purchases from customers. The term includes not only the
physical card-reading devices found in brick-and-mortar retail stores
but also the payment processing portals found in online stores.
• It is an online payments' service that, when integrated with the
ecommerce platform, is devised as the channel to make and receive
payments. The procedure to receive payments includes the customer
requiring to fill in some details, like credit/debit card number, expiry
date, and CVV number.
• The best payment gateway ensures the security and confidentiality of
the customer leaving a good impression and trustworthiness on the
ecommerce website or app.
Process:
• The customer adds products or services to the cart that they want to buy
and proceed with the payment page.

125
 • The customer is then asked to provide the details of the credit card or
debit card. These details include 16-digit card number, cardholder
name, expiration date and CVV number.
• After submitting, the information is securely passed on to your payment
gateway, based on the integration type i.e., Server-to-server, payment
page integration or client-side encryption.
• The payment gateway then encrypts the card details and go through a
security check before sending the card information to acquiring bank.
• The acquiring bank sends the information securely to the card schemes
i.e., Visa, Mastercard, Maestro card, etc.
• The card schemes ensure another layer of security check and then send
the payment information to issuing bank. After performing the security
and fraud check, the issuing bank authorizes the transaction. The
approval or decline message is sent back to the bank from the card
schemes, then to the acquirer.
• The acquiring bank then sends the approval or decline message to the
payment gateway who then sends the message to the merchant. If the
payment is successful, then the acquirer collects the payment amount
from the issuing bank and holds the funds in the merchant account.

Payment gateway types

1. Hosted payment gateways: Hosted gateway uses third-party services
like Payment Services Provider (PSP) to complete the payment services.
Hosted ecommerce payment gateway will take the customers away from
your website to complete the payment process and you don't have control
over customer during the payment process.
When the user goes for payment, they are redirected to the PSP page. Then
the user provides his or her payment details like credit card or e-wallet or
bank details.
2. Self-hosted payment: With this type of gateway, payment details are
collected from the customer within the merchant’s website. After the
details are requested, the collected data is sent to the payment gateway’s
URL. Some gateways require the payment data be provided in a specific
format, whereas others require a hash key or secret key. QuickBooks

126
 Commerce's B2B Payments and Shopify Payments are examples of self-
hosted payment gateways, and both are powered by Stripe.
3. API hosted payment gateways: With API hosted payment gateways,
customers enter their credit or debit card information directly on the
merchant’s checkout page and payments are processed using an API
(Application Programming Interface) or HTTPS queries.
Here all the details of the customers regarding the payment is stored in the
ecommerce website which can be accessed during the payment directly by
the APIs. After payment is made, notification is sent to the customers. This
method is suitable for all types of ecommerce platform since it can be used
with any devices like cell phones or a tablet.
4. Local bank integration: Local bank integration gateways redirect the
customer to the payment gateway’s website (the bank’s website) where they
enter their payment details and contact details. After making the payment,
the customer is redirected back to the merchant website, with payment
notification data sent upon redirection.

Advantages of payment gateway

• SECURE TRANSACTION: A payment gateway checks and validates
online transactions. It protects merchants and customers from flagrant
instances of fraud.
• EASE OF USE: Anyone with basic computer knowledge can perform
business transactions using payment gateways. No need to go through
any costly training or learn elaborate setup. It’s simple and easy..
Everybody can use it.
• RAPID DEPLOYMENT: A merchant can immediately utilize payment
gateway service for his/her online store. He need not wait for agonizing
time to complete the payment gateway setup in his business. He can
avail it in the quickest time possible.
• FEATURE-RICH: Internet payment gateways offer lots of customizable
features that could greatly benefit merchants and customers alike.
There are security features, payment option choices, card features, etc.
You may turn on all these features or select only the ones that best serve
your type of business.
Disadvantages of Internet payment gateway

127
 • RISK ON SENSITIVE INFORMATION: Remember that a payment
gateway deals with customers’ information. Therefore, a payment
gateway company will have files on all sensitive customers’ data-
customers’ names, banks accounts, credit card numbers, passwords.
These are highly valuable data. Crooked and dishonest people will be
more than eager to pay huge sums of money just to access these sensitive
information.
• ANY TECHNICAL GLITCH CAN TAKE
CONSIDERABLE
TROUBLESHOOTING TIME: A payment gateway is basically a
software. And just like any piece of computer software, it can go wrong
at times. When it does, it can have harmful effects. The customers can
no longer access or make payments online. On the other hand, the
software glitch will render merchants’ websites inoperative. It will take
time— maybe weeks or months– to troubleshoot the problem and bring
back merchant's websites back to normal functionality.
• CUSTOMERS’ UNEASINESS: Fraud is widespread in the Net and this
fact scares most customers. They tend to stay away from any web-based
software when making online transactions that involve disclosing
personal information. If a merchant company gets a payment gateway
service but the customers will not utilize it for some reasons or another,
then the merchant will be at the losing end of the bargain.

Types of Transaction Security

• Security is an essential part of any transaction that takes place over the
internet. Customers will lose his/her faith in e-business if its security is
compromised. Ecommerce security refers to the measures taken to
protect your business and your customers against cyber threats.
• Multi-Factor Authentication and Password Complexity: When
operating an e-commerce site, you must secure access to admin panels
and serverside systems. Access to these elements gives attackers the
easiest route to organization-wide controls, meaning financial and
reputational loss.
• You can secure this by utilizing multi-factor authentication on login,
requiring a device or app to verify any login attempts that are
controlled by a single admin.
128
 • Choose a Good Hosting Service: Most small to medium-size enterprises
probably don’t have the monetary and security resources to host their
own web servers, this is especially true for e-commerce. In the best of
cases, your organization makes an excellent product and is looking for a
new avenue to sell it online.
• Updates: Updating server or web hosting software is vital to the security
of the e-commerce platform. In most cases, an e-commerce website will
be hosted by a third-party and designed by a web design platform
(WordPress, Wix, etc.).
• These organizations will release updates on a regular basis, and your
business must ensure that the updates are applied. The updates will
usually most importantly patch security vulnerabilities.
• Firewall: The best friend of anyone trying to control communication
traffic. A firewall is a must-have security for any e-commerce platform.
Firewalls act as the first line of defense against communications coming
to the website or server. They are also very effective at blocking spam
emails and hazardous links.
• Payment Gateways: It’s risky business storing credit card information
on your own servers, especially if you don’t have the resources to keep
them secure. Thankfully there are third-party solutions that can help
with that. • HTTPS (Hypertext Transfer Protocol Secure): If you are
running an ecommerce website, there is no excuse not to use the HTTPS
protocol. The green padlock that appears next to the URL indicates that
the website you are browsing is using HTTPS (it might not be green if
you are not using Chrome web browser, but a version of it appears on
most modern browsers).
• Online shoppers are also becoming accustomed to HTTPS and are likely
not to shop on a website that does not have HTTPS.

What is Internet? How companies use internet promote the product?

• The Internet (or internet) is the global system of interconnected
computer networks that uses the Internet protocol suite (TCP/IP) to
communicate between networks and devices.
• Reaching customers—and potential customers—using online marketing
is more a matter of commitment and strategy than it is a financial

129
 expenditure. It does not need to be expensive to reach online customers
effectively.
• Using a market-led approach to Internet marketing, you can build an
effective website and attract customers through various Internet-based
marketing tactics.
• Internet marketing involves the use of digital media to inform the
market of your business and to entice people to purchase your products
and services.
• Internet Marketing Is Inexpensive: Marketing products through a
physical retail outlet is much more expensive than marketing them on
the Internet. The recurring costs of property maintenance and rental
are not relevant to Internet marketing.
• Internet Marketing Allows for Convenient Store Hours : Without having
to worry about overtime payments to workers or opening hours,
Internet marketing gives you the freedom to keep your enterprise open
24 hours a day, seven days a week.

Impact of Internet on Direct Marketing and E-Commerce industry

• Online marketing is effective for several reasons. It costs very little for
your business to contact new customers and it is usually much faster
and easier to create digital advertisements than print ones. Direct
marketing, however, offers many advantages that you should consider
as you decide upon an advertising plan for your business.
• Targeting Specific Customers with Specific Offers : Direct marketing
allows you to email advertisements or on social media directly to the
customers who are most likely to want what you're selling. Marketing
professional Dave Dolak points out that direct marketing appeals to a
customer's desire not to search extensively for the goods and services
they want. If you own a sushi restaurant, for example, you may benefit
by only emailing your menus to locals or even at social media who have
eaten at your restaurant before (reviews also helps to market) or have
expressed an interest in spending an evening in a sushi restaurant.
• Social media, email newsletters, landing pages, SEO strategies, and
sponsored advertisements are just some of the direct marketing tools
that takes place digitally.

130
 • Building Personal Relationships: Traditional online marketing is
usually impersonal because it is done over a large scale. Direct
marketing techniques along with digital media encourage you to be
much more personal with your prospective customers. Reply to the
tweets by brands or by CEO.
• As an Internet marketing strategy, SEO considers how search engines
work, the computer-programmed algorithms that dictate search engine
behavior, what people search for, the actual search terms or keywords
typed into search engines, and which search engines are preferred by
their targeted audience. SEO is performed because a website will
receive more visitors from a search engine when websites rank higher
on the search engine results page (SERP). These visitors can then
potentially be converted into customers.
• Mobile marketing is a marketing method that allows marketers to send
marketing messages to consumers through the technologies found on a
consumer’s mobile device. Consumers opt in to receive messages.
• When it comes to increasing client retention levels and building
relationships with consumers, the Internet is a crucial platform. By
sending a follow up email to thank the consumer and confirm a
transaction, you can start the relationship out on the right foot when
they make a purchase from your online store.
• You can help to maintain the relationship and provide a personal touch
by emailing clients regularly with special offers that are customized for
them.
Growing Importance of Social Media
• Defining Social Media: Social media websites and applications allow
users to create and exchange user-generated content on the web. Social
media are interactive platforms where content is created, distributed,
and shared by individuals on the web.
• Social media websites and applications allow users to create and
exchange user-generated content where people talk, share information,
participate, and network through technologies such as blogs and social
networking sites. Within the last decade, social media has become one of
the most powerful sources for news updates, online collaboration,
networking, viral marketing, and entertainment.

131
 • With the introduction of Web 2.0 Internet technologies around the turn
of the 21st century, social media venues such as blogs began to allow
users to interact and collaborate with each other in virtual communities.
• Web blogs: Blogs are often viewed as online journals that order content
chronologically, or by date, month, year, and category. Users can also
maintain “vlogs,” or video blogs.
• Microblogs: Microblogs are blogging tools that feature short posts.
Users are usually restricted to posting a few lines of text or uploading
individual images and videos. Notable microblogging sites include
Twitter and Tumblr.
• Podcasts: Podcasts are audio and video files available through
subscription services such as Apple iTunes. The term “podcast” is a
neologism derived from “broadcast” and “pod” (as in “iPod”) since
Podcasts are often listened to on portable media players.
• There are several types of online platforms classified under the vast
umbrella of social media: Social network (Social networking websites
allow users to build web pages featuring personal portfolios and
interests. These pages are used to connect with friends, colleagues, and
other users to share media, content, and communications. Examples of
social networks include Facebook, LinkedIn, MySpace)

Role of Social Media on Consumers and Business

• You Get To Tell Your Story: Having an online presence as a business on
any of the social media forums like Facebook or Instagram is a great
way to interact with your audience and to really connect with them on a
personal level.
• Which gives you the chance to tell your story to all your followers and
inspire them through your success or past failures. Social media is a
place where interacting with your audience gives you more exposure
and helps you better understand your audience.
• You Can Grow An Audience With A Small Budget : Social media
advertising has to be one of the least expensive ways of marketing your
business digitally. With so many different advertising tools available on
these social media forums, you can make use of this opportunity and
costeffectively market your product.

132
• You can grow as a page on social media networks by simply being
consistent and posting interesting and relatable content for your
audience. This can be done by using SEO content, where you use the
most trending keywords and enhance your rankings.
• Stay Top Of Mind With The People Who Matter The Most : Business
owners need to be vigilant on social media networks and need to create
an image of their brand such that it is the first thing that comes to your
customers' minds when they think about a certain product or service.
• For a target audience with the potential of becoming buyers, it is
important that you relate to them through these social media forums,
creating an impression on their minds so much that your business is on
top of their minds whenever they search or think about buying a similar
product.
• Learn About Your Competitors: With all business profiles on all social
media networks accessible to the public, this could be your chance as an
entrepreneur to know your competitor better and understand the
strategies that they are implementing to attract their audiences.
• You would be able to see the content that they are posting on their social
media profiles and judge which posts are doing better. After carrying
out this analysis of your competitor’s profile and looking into all the
queries asked by their audience, you will be able to incorporate those
questions into your digital marketing strategy. Go through their posts,
their comments, and how they are engaging with their audience.
• Can Build Custom Audiences: Social media marketing has made a lot of
things easy for marketers and getting the data on your customers'
activities is on the top. Businesses can access the different tools present
on social media forums to see how many visitors were interested in the
content that you shared, how many clicked any call to action, and how
many purchased if any.

133
 Module 3- E-Commerce

Early stage of ecommerce

• Commerce is a basic economic activity involving trading or the buying
and selling of goods.
• For example, a customer enters a bookshop, examines the books, selects
a book, and pays for it. To fulfil the customer requirement, the
bookshop needs to carry out other commercial transactions and
business functions such as managing the supply chain, providing logistic
support, handling payments, etc.
• As we enter the electronic age, an obvious question is whether these
commercial transactions and business functions can be carried out
electronically. This is often referred to as electronic commerce
(ecommerce). The earliest example of e-commerce is electronic funds
transfer [Kalakota and Whinston, 1971.

Introduction: meaning
• Definitions: E-commerce is exchange of goods and services between
independent organizations and/ or persons supported by comprehensive
usage of powerful ICT (Information and communicative technology)
systems and globally standardized network infrastructure.
• Electronic commerce, commonly known as e-commerce, consists of the
buying and selling of products or services over electronic systems such
as the Internet and other computer networks.
• The World Trade Organization defines e-commerce as, "e-commerce is
the production, distribution, marketing, sales or delivery of goods and
services by electronic means."
• The emergence of the Internet throughout the world has been
contributing such a variety medium in doing business as well as people
lifestyle.
• In 1991, the World Wide Web was created. Although the Internet is now
a major part of most of our daily lives, it’s important to recognize that
it’s still a relatively new development compared to the overall retail
industry. Then, in 1994, Pizza hut officially became the first major
business to offer online purchasing. One year later, eBay and Amazon

134
 were founded. Many people view this is as the start of ecommerce as we
know it today.
• By 1996, online sales surpassed $1 billion. This is an incredible jump
given that the Internet was still only 5 years old – and it certainly
forecasted the industry’s later growth. Even so, no one could’ve
predicted the $25 billion in sales that took place in 2000.
• By 1997, e-commerce solidified its place in the retail industry with 70%
of Internet users making an online purchase during the holiday season.
In 2005, the term “Cyber Monday” was coined, and the Monday after
Thanksgiving officially became the biggest online shopping day of the
year.
E-Commerce – 9 Important Features: Technology-Enabled, Mediated,
Universality, Inter-communication, Delivery of Information, Virtual
Communities and a Few Others
• 1.It is Technology-Enabled: Traditional commerce is taking place since
times immemorial, but E-commerce is result of integration of digital
technology with business processes and commercial transactions. The
technological foundations of E-commerce are internet, WWW and
various protocols. e.g., PayPal for safe payments. Google pay with
mobile app.
• 2. Technology Mediated: In E-commerce buyers and sellers meet in
cyber space rather than physical place. Hence E-commerce does not
involve face to face contact. This is a virtual space that enables the
buyers and communicate without meeting. The problems or grievances
of consumers can be addressed by sellers as well. E.g., computer
generated emails, or query solving chats.
• 3. Universality: Buying and selling take place through websites in
ECommerce. The websites can be accessed from anywhere around the
globe at any time therefore it possess the feature of universality.
• Internet is shared by all the nations around the world . It reduces the
search costs for the consumers, becomes simpler and faster with search
results. E.g., Google is same everywhere. One can access amazon USA
website from India too.
• 4. Intercommunication: E-commerce technology ensures two-way
communications between buyer and seller. On one hand by using E-
commerce firms can communicate with customers through E-commerce
135
 enabled websites. On the other end, customers can also fill order forms,
feedback forms and can communicate with business operating firms.
• 5. Delivery of Information: E-commerce serves as the best channel of
communication. E-commerce technologies ensure speedy delivery of
information at very low cost and considerably increase information
density as well. The electronic commerce technology, reduce the
information collection, storage, communication and processing cost. At
the same time, accuracy and timeliness of the information technology
increases greatly, information is more useful, more important than ever.
• 6. Electronic Completion of Business Processes: By using E- commerce
we can perform business transactions like accounting and inventory
through computers at global level.
• 7. Virtual Communities: Virtual Communities are online communities
created by means such as chat rooms and specifically designed sites like,
where people can interact with each other having common interest using
the internet.
• 8. Inter-Disciplinary in Nature: Implementation of E-Commerce needs a
lot of knowledge of managerial, technological, social and legal issues.
Besides this, understanding of consumer behavior, marketing tools and
financial aspects is as crucial as designing interactive E- Commerce
websites.
• 9. Customization: With the use of E-commerce technology, the world is
moving from mass-production to mass-customization. Product
customization ensures that goods are tailor made as per the
requirements and preferences of customers.
• Like Dell Computers Website www.dell.com enables the consumers to
mention configuration of a Computer and then the product is made
available and delivered as per the configuration ordered by the
customer.
➢ Different types of E-Commerce
• The major different types of E-Commerce are:
• I. Business-to-Business (B2B);
• II. Business-to-Consumer (B2C);
• III. Business-to-Government (B2G);
• IV. Consumer-to-Consumer (C2C);
136
 • V. Mobile Commerce (M-Commerce).

Business to Business (B2B)

• 1. Business to Business or B2B refers to E-Commerce activities between
businesses.
• 2. In E-Commerce B2B, transactions are usually carried out through
Electronic Data Interchange or EDI. EDI is an automated format of
exchanging information between businesses over private networks.
• 3. EDI is composed of standards that enable businesses’ computers to
conduct transactions with each other, without human intervention.
• 4. For Example- Manufacturers and wholesalers are B2B companies.
Business to Customer (B2C):
1. Business to Customer or B2C refers to E-Commerce activities that
are focused on consumers rather than on businesses.
• 2. For instance, a book retailer would be a B2C company such as
Amazon.com.
Customer to Business (C2B):
1. Customer to Business or C2B refers to E-Commerce activities, the
definition of C2B business is a model where a customer or end-user
makes content, products, or services that a company uses to complete a
business process.

137
 • 2. For example – Examples of C2B models include referral programs,
paid testimonials, or data sharing. social networks, websites, blogs,
podcasts, and videos-have changed business processes. In today’s world,
consumers can post their thoughts on brands whenever they want;
companies must adapt to new ways of marketing themselves.
Customer to Customer (C2C):
1. Customer to Customer or C2C refers to E-Commerce activities,
which uses an auction style model.
• 2. Customers are also the business and C2C enables customers to
directly deal with each other. An example of this is peer auction giant, E
Bay.
M-Commerce (Mobile Commerce):
• 1. M-commerce (mobile commerce) is the buying and selling of goods
and services through wireless technology i.e., handheld devices such as
cellular telephones and personal digital assistants. Japan is seen as a
global leader in m-commerce.
• Mobile commerce services were first delivered in 1997, when the first
two mobile-phone enabled Coca Cola vending machines were installed
in the Helsinki area in Finland. The machines accepted payment via
SMS text messages.

Traditional commerce and e-commerce

• Traditional retailing essentially involves selling to a final customer
through a physical outlet or through direct physical communication.
This normally involves an extensive chain starting from a manufacturer
to a wholesaler and then to the retailer who through a physical outlet
has direct contact with the final customer.
• e-Commerce or electronic commerce refers to the exchange of goods
and services, funds or information, between businesses and consumers
using the electronic network, i.e., internet or online social network.
• But with the advent of e-Commerce, people can buy goods, pay bills, or
transfer money in just one click.
• Many people, still prefer traditional commerce over e-Commerce, due to
their dogma that the latter is not safe, however, this is just a myth. Both

138
 modes have their pros and cons, so let’s see the difference between
traditional commerce and e-Commerce.

Difference between traditional and e-commerce

139
Factors Responsible for Growth of E-Commerce:

Constant changing
• Ecommerce is an environment that’s constantly changing and
upgrading as technologies improve and companies battle against each
other to win a greater share of the pie.
• If you’ve been keeping up with ecommerce analytics, you know that the
trends show that growth and change takes place every year.
• The future of ecommerce can’t be predicted in full, there is enough
evidence to predict that M-Commerce will flourish, and various social
media platforms like Instagram and Facebook will become even more
crucial in the ecommerce world.
• Let us learn what the future of ecommerce will look like.
Growth of mobile commerce
• Online retailers’ growing reach in non-metro cities is being driven by
the rise in usage of mobile internet in the country.
• According to Internet and Mobile Association of India, the number of
mobile internet users in the country stood at 173 million in December
2014.
• It is set to grow manifold by 2020. An Association of Indian Industry
report estimates that in the next six years, the number of people
accessing the internet through mobile is set to reach 600 million.
• “Given the increased mobile penetration and smartphone adoption in
these areas, mobile is certainly one of the major factors driving this
trend,” adds Khanna of Snapdeal.com
Growing usage of debit cards for cashless transaction
• There has been a net addition of nearly 140 million debit cards in the
country in the past two years. What is more, the usage of debit cards at
point-of-sale terminals has seen a growth of 86 per cent in the same
period.
• It indicates the willingness to use debit cards for purposes other than
withdrawing money at ATMs has increased. With many online retailers
140
still insisting on use of cards for high value transactions, it is a welcome
change. It will allow e-tailers to reach out to many areas and many more
customers in coming years.

141
 •
Currently, cash on delivery constitutes nearly 70 per cent of all
transactions for online retailers. But online retailers say the usage of
cards for online transactions is steadily rising.
Growth in cities beyond metros
• About 20 per cent of India’s population lives in cities
outside of metros. This suggests that this large group
of city dwellers have significant purchasing power.
Honda, for instance, sells 60 per cent of its Amaze car
in tier-II and tier-III cities. These cities account for 55
per cent of Honda’s City models.
• Consumer demand is rising rapidly even in small
towns and cities. Talking about the potential of fast-
moving consumer goods (FMCG) sector, metros will
remain a staple for marketers and increasing a rural
footprint will be critical for volumes in the long run,
there is a growth opportunity that is vastly under-
rated by many marketers today, which could emerge
as a key growth engine for the next 10 years.
• Middle India, a region made up of approximately 400
towns each with a population of 1-10 lakh, are home
to 100 million Indians. These cities are ready to
behave like the metros of tomorrow…The annual per
capita FMCG consumption of Middle India towns
touched Rs 2,800”, which is much higher than the
national average of Rs 1,600.
Issues in Implementing E-Commerce
• 1. Cyber & Data Security:
• When it comes to eCommerce, one of the biggest
challenges faced is security breaches. There is a lot of
information/data that is involved while dealing with
eCommerce and a technical issue with data can cause
severe damage to the retailer’s daily operations as
well as brand image.

142
 •
• Solution: Be vigilant and always back up your data.
Post that, you can install security plugins onto your
website to prevent it from getting hacked. There are
several plugins out there, pick one that works best for
your eCommerce website. E.g., where the server is
hosted? virtual data is maintained by Microsoft
Azure, and Amazon. Application system, OS etc.
Example
• 1. Virtual/physical server security should be secured.
• 2. OS of the server- security patches, OS updates
regularized
3. Application (webserver) security patches, update patches
• 4. Code should be reviewed by security specialist.
Credentials and data stored in encrypted form.
• E.g., authentication, data encryption, and decryption
• 5. Client server communication should be encrypted.
E.g., www.amazon.in it has valid certificate to have
their website secured.
2. Online Identity Verification
• When a shopper visits an eCommerce site, how would the retailer know
if the person is who they say they are? Is the shopper entering accurate
information? Is the shopper genuinely interested in the eCommerce
products?
• If you do not have the accurate details or information, how do you
proceed? Well, it does become tricky. The solution would be to invest in
online identity verification.
• Solution: There are different ways to incorporate online identity
verification. Some examples include biometrics, AI, single sign on, one
time password, two-factor authentication and so on. E.g., OTP sent to
email id or registered phone number.
3. Customer Experience
• Customer experience or user experience is key to a successful
eCommerce website. Shoppers expect a similar if not same experience

143
 •
as one they would get in a brick-and-mortar store. The flow of the
website, the segmentation of the website and the retail personalization
of products based on the shopper’s preferences are imperative.
• Solution: There are several ways to improve the user experience. The
most important would be to have a clean and simple website so that
shoppers can navigate through easily. The next point would be to have
clear CTAs (call to action) so that the shopper knows exactly what to do.
4. Product Return & Refund Policies
• According to the research, more than 60% of online shoppers say that
they look at a retailer’s return policy before making a purchase. When
an eCommerce site says “no returns or refunds” it makes a shopper
nervous and less likely to trust the retailer. When shopping online,
customers want the flexibility of making a mistake that doesn’t cost
them.
Solution: Customer satisfaction is the most important factor for any
retailer. Therefore, having a flexible return and refund policy not only
helps with customer satisfaction with it also helps with customers
making purchases without being nervous.
5. Choosing the Right Technology/Partners To Fix Your
eCommerce Challenges
• Choosing the right technology or partner will make or break your
business. A retailer’s growth might be stunted because their technology
is limiting them or because they have hired the wrong agency to help
them manage their projects.
• There are a lot of aspects that need to be in place for a successful retail
business, but a good technology foundation is crucial.
• Solution: a unified Visual A.I. platform that is redesigning the future of
retail commerce to fix all your eCommerce challenges. Using image
recognition and data science,AI helps retailers generate product, and
customer intelligence, and combine these with market insights, to power
growth.
Trends in E-Commerce in Sectors like: Retail, Banking, Tourism,
Government,

144
 •
Education
• In 1995, the first item ever was ordered online on Amazon – a book.
• Around 20 years later, the ecommerce industry has made over 2 trillion
US dollars in sales worldwide. There’s no looking back now.
Ecommerce has revolutionized retail. It has evolved to meet the
changing needs of people, and to make online shopping easier for the
modern-day customer.
• Ecommerce sales have been growing constantly and for good reason.
Online shopping is one of the most popular online activities. Global
ecommerce sales are projected to increase 26.7 percent year-over-year
to
$4.891 trillion in 2021 (eMarketer, 2021)
The Future of Ecommerce After COVID-19
• Undeniably, one of the biggest impacts—if not the biggest—on
ecommerce trends in 2020 will be COVID-19.
• With governments worldwide shutting stores and implementing
lockdowns to restrict social movement for months on end in a bid to
combat the coronavirus, more and more people are resorting to online
shopping to purchase items.
Already, ecommerce giant Amazon’s Jeff Bezos has seen his fortune
grow by nearly $24 billion thanks to increased customer demand for
Amazon’s products and services.
• And experts predict that the impact of the coronavirus will not just be a
short-term boost to ecommerce but one that’s here to stay, even after
COVID-19. This is because people will get comfortable with the comfort
and convenience it offers and the benefits of contactless payments, both
of which are likely to cause a permanent behavioral shift towards digital
purchases.
Mobile Shopping is Growing
• The growth of mobile commerce has been particularly noteworthy. In
2020, total sales made via mobile devices came in at $2.66 trillion.
• Ecommerce growth has been driven in part by the increase in usage of
mobile devices. That’s because consumers aren’t just checking out

145
 •
online, they’re also using their mobile devices to browse or research
before making their mind up about their purchase.
• This is especially so with Millennials and Gen Z consumers, who have
grown up surrounded by computers and the internet. These generations
are also more likely to be shopping online using their mobile devices in
comparison to older generations.
PayPal and other 3rd party intermediaries
• PayPal was developed as a safer way to pay merchants, vendors, and
individuals – instead of giving a company or person your credit card
information or banking information, you could use PayPal as the
gobetween.
• PayPal was touting itself as a secure and encrypted platform for
handling payment long before most other financial organizations had
thought to elevate the security. PayPal also quickly became a viable
payment option in e-commerce settings, replacing the need for entering
credit card numbers or bank account numbers by substituting it with
one account login.
Emerge of e-Learning
• Emerge of e-Learning has been proved as a boon for the educational
sector. Thus e-Learning plays an important role in explaining difficult
subjects by breaking them down into info graphs, 3D structures and

146
 explaining the problem in a form of animated story or simplifying it in
language, which will be easy for students to grasp.
• 3D learning helps students to get an in-depth knowledge and
understanding of the subject. Through e-Learning students can share
their views, discuss, and form opinions and debate without wasting time
and energy in travelling and arranging a place for debating.
• It provides a platform to let students open and helps in giving them
equal opportunity to keep their views upfront.
E-tourism
• The E-tourism market refers to the virtual and internet-based services
that can complement the traditional tourism market. Features such as
flights, hotels, reservations, car renting services, and other forms of
travel are achieved through electronic communication.
• E-tourism offers additional assistance for consumers by offering
realtime help which increases their comfort and leisure time by a high
margin.
• The advent of the smartphone industry and the technological
advancement in the connectivity field are expected to drive the global
etourism market. Additionally, an increase in disposable cash among
consumers and the easy accessibility of various marketing packages
online will further help the e-tourism market reach previously untapped
markets.

E-Business and website

• E-business- Meaning, Launching an E-Business, Different phases of
Launching an E-Business, Important Concepts in E-Business: Data
Warehouse, Customer Relationship Management, Supply Chain
Management, and Enterprise Resource Planning

147
 •
Website- Design and Development of Website, Advantages of Website,
Principles of Web Design, Life Cycle. Approach for Building a Website,
Different Ways of Building a Website Launching an E-Business
Step 1: Pick the right products:
So, where do you begin? Well, first you must figure out what your
product is going to be and then start with a product selection. Choose
items that inspire you and there’s likely someone out there who will love
them just as much, too. Consider who your ideal customer would be and
identify a need in your market.
• It’s also a good idea to stick to somewhat of a niche instead of just
putting together a bunch of random items, like dog toys and wine
glasses, unless they have an underlying theme that ties them together.
Step 2: Choose an ecommerce platform
• Next, you need to choose an ecommerce platform where you’ll host your
website. There are tons of different ones out there, each with their own
merits as to why they work well. After you’ve decided on a product and
chosen your ecommerce platform account, then comes the hard part of
building your website and moving forward into sales and marketing.
The three main types of e-commerce platforms are Shopify, Wix, Go
Daddy, Squarespace, 3dcart is best for online shopping.
Step 3: Create an intriguing & memorable homepage:
• When someone first comes to your online store, it is critical to ensure it
catches their eye and doesn’t make them leave after only a few seconds.
You want to give them something that is pleasant to look at and features
appropriate colors and a recognizable logo. You also want to decide
which products you’ll feature on your page. Select a handful and make
sure to get professional photos of them to use on the homepage.

Worst website: Yale University School of Art

• The content has absolutely no structure, and in addition, the footer,
header, and sidebar are poorly designed. There are also lots of blinking
animations, underlined links, strange pictures, and low-quality photos.

148
• Consider the homepage of its US site above. The text is small, and the
navigation menu hides behind a hamburger button so it's not
immediately apparent to users what to do next. With no explicit CTA,
visitors can easily become confused or frustrated.
Best websites
• This striking illustration of the airplane, as it slowly moves across the
screen, is sure to grab website visitors’ attention.
• This page has everything you need in an effective homepage: An image
that tells a story but isn’t too distracting, use of white space, easy nav
bar, a tagline or slogan, and a clear CTA.

Step 4: Define your overall branding and the look & feel of your website
• Your e-commerce brand is what shoppers will use to recognize your
ecommerce company across multiple different channels. This includes
your website design, logo design, social media platforms, product
packaging, and so much more. Again, choose colors that meet your
message and fonts that are eye-catching but still easy to read. Think
carefully about how you want to portray your ecommerce company.
Step 5: Create your product pages:
You’ll want to include a variety of details, such as selling points, item
information and specs, product descriptions, and more. Product photos
and fields to choose and see various colors, styles and quantities is also
important.
Step 6: Set up blogs and social media accounts
149
•
It is time to add content to your ecommerce website. Blogs and articles
aren’t only helpful for customers to educate themselves on your products,
but the added content can help you rank higher on search engines as well.
Step 7: Set up your checkout, shopping cart and wish list:
• Finally, you want to set up your checkout, shopping cart, and wish list
options on your ecommerce website. Create a smooth shopping
experience. These parts of the shopping process can have a big impact
on your customer’s experience, so make sure everything is working
smoothly.

Important Concepts in E-Business:

• Data Warehouse: A data warehouse is a type of data management
system that is designed to enable and support business intelligence (BI)
activities, especially analytics. Data warehouses are solely intended to
perform queries and analysis and often contain large amounts of
historical data. The data within a data warehouse is usually derived
from a wide range of sources such as application log files and
transaction applications.
• A data warehouse centralizes and consolidates large amounts of data
from multiple sources. Because of these capabilities, a data warehouse
can be considered an organization’s “single source of truth.”
• https://www.youtube.com/watch?v=AHR_7jFCMeY

Supply chain management

• Supply chain management is the handling of the entire production flow
of a good or service — starting from the raw components all the way to
delivering the final product to the consumer.
• A company creates a network of suppliers (“links” in the chain) that
move the product along from the suppliers of raw materials to those
organizations that deal directly with users.
• Supply chain activities cover everything from product development,
sourcing, production, and logistics, as well as the information systems
needed to coordinate these activities.

150
Enterprise resource planning (ERP)

151
 Enterprise resource planning (ERP) refers to a type of software that
organizations use to manage day-to-day business activities such as
accounting, procurement, project management, risk management and
compliance, and supply chain operations.
• A complete ERP suite also includes enterprise performance
management, software that helps plan, budget, predict, and report on
an organization’s financial results.
• https://www.youtube.com/watch?v=ZcYk2E6YCY0
Example of ERP
• Consider a company that builds cars by procuring parts and
components from multiple suppliers. It could use an ERP system to
track the requisition and purchase of these goods and ensure that each
component across the entire procure-to-pay process uses uniform and
clean data connected to enterprise workflows, business processes,
reporting, and analytics.
• When ERP is properly deployed at this automotive manufacturing
company, a component, for example, “front brake pads,” is uniformly
identified by part name, size, material, source, lot number, supplier part
number, serial number, cost, and specification, along with other
descriptive and data-driven items. Since data is the lifeblood of every
modern company, ERP makes it easier to collect, organize, analyze, and
distribute this information to every individual and system that needs it
to best fulfill their role and responsibility.

Website: Design and Development of Website

• Web design and development is an umbrella term that describes the
process of creating a website. Like the name suggests, it involves two
major skill sets: web design and web development.
• Web design determines the look and feel of a website, while web
development determines how it functions.
• The iconic designer Paul Rand wrote, “Design is a problem-solving
activity. It provides a means of clarifying, synthesizing, and dramatizing
a word, a picture, a product, or an event.”

152
 •
• Web designers are constantly solving problems for their users . Websites
should make it easy for users to go where they want to go and, do what
they want to do.

• Web design is important because it impacts how your audience

perceives your brand. The impression you make on them can either get
them to remain on your page and learn about your business or leave
your page and turn to a competitor. A good web design helps you keep
your leads on your page.
• Web development is the work involved in developing a Web site for the
Internet (World Wide Web) or an intranet (a private network). ... Web
development may use content management systems (CMS) to make
content changes easier and available with basic technical skills.

Advantages of website
• Reaching a Wider Audience: Building a website for your business will
mean you could potentially reach these otherwise unreachable
customers. Your business might be local, but you might have the
potential to sell your products or services to a wider market, whether it
be people in the next town, the nation as a whole or even the
international market.
• Data shows that internet shopping is still on the rise, so taking your
business online will potentially allow you to take advantage of the
growth and expand your business
• Anyone, Anywhere & Anytime: An advantage of having a website is
your business information and details about your products and services
can be accessed by anyone, no matter where they are on the planet or
what time of day it is. The internet is online 24 hours a day, 7 days a
week. So even if your business isn’t open your website will be.
• Publicity & Advertising: You may think of the advantages of a website
in terms of advertising and publicity for your business. The costs of
having a business website are quite low. You need a suitable domain
name and good quality webhosting and you’re ready to go. The ongoing
costs are minimal, but the potential return on investment could be quite
significant.
153
 • Links From Others & Viral Marketing: With a website and the current
use of social media and marketing, it is quite possible for a good idea,
clever product or business service to go “viral”. If your business is
good, people will link to it, people will talk about it, and they will share
their thoughts. Recognition of your business and your brand will grow.
Securing Your Brand Online: Having a website for your business is not
just an advantage; it’s an essential way to protect your business brand
online. Stake your business claim on the internet or someone else will!
There is a risk that if you don’t have a business website and secure a
domain name relevant to your business then someone else will do it for
you. The act of Cybersquatting is now less prevalent since the
introduction new laws to combat it, but there is still a risk of someone
innocently taking your preferred domain name.

Principles of design:
• 1. Simple Is the best: The over-designed website may not work. Putting
too many elements on the page may lead to distracting visitors from the
main purpose of your website. Simplicity always works in an effective
web page design. Keep your design as simple as possible so that the
visitors can feel it easy-to-use and can find their ways easily.
• 2. Consistency: Consistency in website design matter a lot. Give your
attention to match design elements throughout each of the pages. It can
be understood that your fonts, sizes, headings, sub-headings, and button
styles must be the same throughout the website. Finalize the fonts and
the right colors for your texts, buttons, etc., and stick to them
throughout the development.
• 3. Typography & Readability: You should keep your typography
visually appealing and readable for visitors, along with the tricky use of
keywords, meta-data, and other SEO-sensitive elements. Consider using
fonts that are easier to read. The modern sans-serif fonts as Arial,
Helvetica, etc. can be used for the body texts.
• 4. Mobile Compatibility: Keeping in mind the ever-growing usage of
smartphones, tablets, and phablets, web design must be effective for
various screens. If your website design doesn’t support all screen sizes,
the chance is that you’ll lose the battle to your competitors.

154
 •
• 5. Easy Loading: No one likes the website that takes too much time to
load. So, take care of it by optimizing image sizes, combing code into a
central CSS or JavaScript file as it reduces HTTP requests. Also,
compress HTML, JavaScript, and CSS for enhanced loading speed.
(HTML (the Hypertext Markup Language) and CSS (Cascading Style
Sheets) are two of the core technologies for building Web pages. HTML
provides the structure of the page, CSS the (visual and aural) layout, for
a variety of devices.)

Life Cycle Approach for Building a Website

• 1. Information Gathering: This step involves identifying the purpose,
goals, and target audience of your website. You’ll determine the
requirements of the audience using this website and the scope of your
project.
• 2. Planning & Analysis: Using the information gathered in the first step,
you’ll form a sitemap of the website and analyze what tools and
technologies will be most suitable for your requirements. You’ll also
document the requirements in the form of “use cases.”
• 3. Implementation: This is where you implement the site structure and
“code” the use cases you formed in the previous step. This includes both
the front-end and back-end development of the site.
• 4. Launch: Once the views and functionality are implemented, the next
step is to launch it online. This involves steps like registering a domain
name, subscribing to a web hosting service, and publishing your web
app.
• 5. Testing: To make sure your website is running perfectly on the web
server; you’ll perform rigorous testing. This involves front-end testing,
database testing, server testing, etc.
• 6. Marketing: There’s a list of some post-launch items that you will also
need to take care of e.g., recording web analytics, optimizing your site
for search engines, and promoting your site on social media so that
more people will visit your website.

155
 • 7. Maintenance: Maintenance is endless and needed indefinitely. You’ll
need to make sure that your website is running smoothly and is up-
todate.

Different Ways of Building a Website

• Free Websites Builders: Probably the simplest to use, the Free Website
Builders offer the ease of use (quick and easy), with minimal cost but
sacrifice not only on quality…but also functionality. Meaning, you are
very restricted to the type of content you can put on the website, as well
as what you may like it to do.
Template Websites: Most of the cost involved in building a website is in
the Design. So, by using a Template Website for the design of your
website, you essentially cut a large portion of content.
• The only drawback on using template sites, is you will generally not
have the knowledge to customize it to your needs, (Meaning you are
going to have to either learn how to or hire a programmer) and most do
not come with a CMS system (Content management System) which
allows you to edit the content on your site your self through a backend
management area.
• WordPress Websites: Over 90% of the website designs are built using
WordPress as the CMS (Content Management System). Now basically,
all we are not talking about is “Skinning a CMS” (In Web Designer
Speak). We are looking to find the best methods of getting an interface
(design or look) onto the WordPress system.
• Do-It-Yourself Web Design: You might look at the developer's triangle
above and ask, “Why would anyone want to build a website this way”.
Well, if you have the Time, but not the money and you are looking for
something you can build yourself, and develop a handy skill set, then
you might a like ‘Do It Yourself’ Web Design.

Lifetime Value Sums

156
 •
Method:
Step1 :Find out contribution of each year ( Ci=Income – Expenditure) (8 marks)
Step 2: Calculate Discount /Rate of Interest (1 mark)
Step 3: Calculate LTV of each year by using the formula (4 marks)
Step 4 LTV= PLTV(Y0) + PLTV (Y1 ) + PLTV (Y2) + PLTV (Y3) + PLTV(Y4) (1
mark)

Step 5- Final answer of LTV. (1 mark)

Contribution is : Income – Expenditure

Income Expenditure
Direct & Indirect Cost
• Sales
Direct & Indirect expenses
• Revenues
Discounts
• Service Fees
Bad debts
• Referrals
Direct Mailer
Telemarketing
Formula
Formula of LTV is:
n
Ci
LTV = i = 0 ( 1 + d)i

Where:
Ci = net contribution from each year's marketing activities (income-
expenditure) d = discount rate i = the expected duration of the
relationship (in years).
d = 10% as given in the Question

d= = 0.1
PVCY0/PVCY1- past/present value of customer

Type 1 :

157
 Calculate the lifetime value of the given Customer.
Acquisition Year 1 Year 2 Year 3 Year 4

Sales -------- 6000 10,000 15000 25,000

Referrals -------- 500 2000 2000 3000

Telemarketing 2000 4000 4000 5000 5000

Bad debts ------- 500 500 500

Note: Discount rate is 10%

All the figures are in Rupees.
SOLUTION

Acquisition Year 1 Year 2 Year 3 Year 4

Income -------- 6500 12000 17000 ,28000

Expenditure 2000 -4000 4500 5500 5500

Contribution -2000 2500 7500 11500 22500

=Ci
Discount: d= 10/100= 0.1
n
Ci
LTV=  (1 + d)i
i=0

So discount is (1+0.1)= 1.1

PVC0 = -2000/(1.1)0 = -2000/1 = -2000

PVC1 = 2,500/(1.1)1 =2,500/1.1 = 2272.73

PVC 2 = 7,500/(1.1)2 =7,500/1.21 = 6198.34

PVC3 = 11,500/(1.1)3 = 11,500/1.331 = 8,640.12

PVC4 = 22,500/(1.1)4 = 22,500/1.4641 = 15,367.80

LTV = PVC(Y0) + PVC (Y1 ) + PVC (Y2) + PVC (Y3) + PVC (Y4)
= (-2000) + 2272.73 + 6198.34 + 8640.12 + 15367.80
LTV = Rs 30,478.99
So, LTV of the given customer is Rs. 30,478.99/-

158
Type 2: Historical Method:
Calculate the lifetime value of the given customer as on 31st March
2013.
Pl note discount is not applicable to the past years but only for
acquisition year i.e., current year.
Y4 Y3 Y2 Y1 Y0

2009 2010 2011 2012 2013

SALES -- 6000 10,000 15,000 25,000
Referrals -- 500 2000 2,000 3,000

Tele 2,000 4,000 4,000 5,000 5,000

Bad Debt -- -- 500 500 500
Note : Discount rate is 10%. All the figures are in Rupees
Solution:
(Please note that discount is not applicable to years from 2009 to 2012 as they are
in the past hence discount is zero)

Y4 Y3 Y2 Y1 Y0

Income -- 6,500 12,000 17,000 28,000

Expenditure 2,000 -4000 -4,500 -5,500 -5,500

Contribution -2,000 2,500 7,500 11,500 22,500

PVC (Y0) = 22,500/ (1+0.1)0 = 22,500/ (1.1)0 = 22,500/-

PVC (Y1) = 11,500/ (1+0)1 = 11,500 / (1)1 = 11,500/-(Earning earned so

no discount)

PVC (Y2) = 7,500/ (1+0)2 = 7,500 / (1)2 = 7,500/- (Earning earned so no

discount)

PVC (Y3) = 2,500/ (1+0)3 = 2,500 / (1)3 = 2,500/- (Earning earned so no

discount)
PVC (Y4) = 2,000/ (1+0)4= 2,000 / (1)4 = -2,000/- (Earning earned so no
discount )
LTV = PVC(Y0) + PVC (Y1) + PVC (Y2) + PVC (Y3) + PVC(Y4)
= 22,500 + 11,500 + 7,500 + 2,500 +(-) 2,000
LTV = Rs 42,000/-

159
Type 3
III METHOD – DISCOUNT RATE
Pl note that discount rate is applicable from acquisition year
(current and future). Earlier years are past years, so discount is not
applicable.
Calculate the lifetime value of the given customer as on March 31st
2013.
Y3 Y2 Y1 Y0 Y1
2010 2011 2012 2013 2014

SALES -- 6000 10,000 15,000 25,000

Referrals -- 500 2000 2,000 3,000

Tele 2,000 4,000 4,000 5,000 5,000

Bad Debt -- -- 500 500 500

Solution
When discount rate is not given, we assume it as 10%
Y3 past Y2 past Y1 past Y0 Current Y1 future

Income -- 6,500 12,000 17,000 28,000

Expenditure 2,000 -4000 -4,500 -5,500 -5,500

Contribution -2,000 2,500 7,500 11,500 22,500

(LTV) Life time Value =

PVC or PLTV (Y0 current ) = 11,500/ (1+0.1)0 = 11,500/(1.1)0 = Rs 11,500/-

PVC or PLTV (Y1future) = 22,500 / (1.1)1 = 22,500/1.1 =Rs 20454.55

PVC or PLTV (Y1 )

past = 7,500 / (1.0)1 =7,500/1= Rs 7,500/ (Earning earned so
no discount)

PVC or PLTV (Y2 past) = 2,500 / (1.0)2 = 2500/1= Rs 2500/-Earning earned so no

discount)

PVC or PLTV (Y3 past) = -2000/(1.0)3 = - 2000/1= - 2000/- Earning earned so no

discount)

LTV = PLTV (Y0) + PLTV (Y1 ) + PLTV (Y1) + PLTV (Y2) + PLTV(Y3)
LTV= 11,500 + 20,454.55 + 7,500 + 2500 + (-) 2,000 (Contribution)
LTV = Rs 39,954.55

160
Type 3
Calculate the Life Time value for the M/s Aarya and Aayesha as on 2008 given the
following data
Particulars 2007 2008 2009 2010 2011

Direct mailer 5,000 6,000 7,000 4,000 3,000

Marketing cost 3,000 2,000 ----- 9,000 10,000

Sales 55,000 60,000 80,000 50,000 45,000

Direct revenue 3,500 4,500 2,500 1,500 7,500

Direct Cost 2,500 3,500 4,500 1,500 ----

Note: The Rate of Interest on loans is 10% . All figures are in
Rupees Solution:

Particulars 2007 2008 2009 2010 2011

Income 58,500 64,500 82,500 51,500 52,500

Expenditure 10,500 11,500 11,500 14,500 13,000

Contribution 48,000 53,000 71,000 37,000 39,500

LTV) Life time Value = ∑𝑛𝑖=0( 𝐶𝑖
1+ 𝑑)𝑖

d= 10/100=0.1

PVC (Y0) = 53000 / (1+0.)0 = 53000 / 1 = Rs 53000/-

PVC (Y1) = 71000 / (1+0)1 =

71000/ 1.1= Rs 64545.45

PVC (Y2) = 37000 / (1.0)2 =

37000/ 1.21= Rs 30578.51

PVC (Y3) = 39000 / /(1.0)3 =39500 / 1.331 = Rs 29676.93/-

PVC ( past ) = 48000/( 1) = 48000 = Rs 48000 ( earning earned so no

discount)

LTV = PVC(Y0) + PVC (Y1 ) + PVC (Y2) + PVC (Y3)+ Contribution 2007
LTV= 53000+64545.45+30578.51 +29676.93+ 48000
LTV= Rs 2,25,800.89

161
 Problems for Practice (April 2010 – Oct 2013)
1) Calculate the Life Time value of Mr. Khanna as on 31st March 2010
given the following data:

2006 2007 2008 2009 2010

SALES 4000 14000 25000 42000 1,00,000

Referrals -- 2000 5000 20000 30000

Telemarketing 2,000 2000 7,000 10000 25,000

Bad Debt -- -- 500 2000 5000
Note: All the figures are in Rupees.
The company pays an interest of 10% on all borrowings from the bank.
________________________________________________________________

2) Calculate the lifetime value of the given Customer as on 31/03/2009.

2005 2006 2007 2008 2009

Sales -------- 1,00,000 1,50,000 1,50,000 2,50,000

Service -------- 10,000 15,000 10,000 20,000

Charges

Telemarketing 20,000 20,000 25,000 25,000 20,000

Bad debts ------- 5000 5000 10,000 10,000

Note: All the figures are in Rupees.

The discount is 10%

3)Calculate the lifetime value of the given Customer

Acquisition Year 1 Year 2 Year 3 Year 4

162
 Sales -------- 24,000 42,000 61,000 86,000

Service -------- 3,000 5,000 6,000 8,000

Charges

Telemarketing 6,000 9,000 11,000 13,000 14,000

Discounts ------- 1,500 2,500 3,500 4,500

Bad debts ------ 2,000 4,000 6,000

Note : All the figures are in Rupees.
The company pays an interest of 10% on loans
_______________________________________________________________

4)Calculate the lifetime value of Mr Ravi Kumar as on 31/03/2008

2006 2007 2008 2009 2010

Sales -------- 18,000 24,000 35,000 45,000

Referrals -------- 4,000 5,000 6,000 7,000

Telemarketing 4,000 4,000 5,000 6,000 7,000

Discounts ------- 4,000 5000 5,000 4,000

Note : All the figures are in Rupees
Rate of Interest on loans is 10%.

Case Study Pointers for reference only

Approach _(Integrated )

Target Audience :
a) B2C ,

b ) B2B ( Small, medium , Large enterprises or Corporate ) Hotels, Hospitals , resort

etc will fall under this categories depending upon the case study.
c) B2I ( Wholesalers ,Distributors , Dealers, Retailers Modern format stores i,e
BIG BAZAR, D- MART, Hyper city etc . Online portals) will fall under this categories
depending upon the case study.

1 ) Product offering

163
a) Mention the product/ serivce and company name, features attributes ,colors, types , core
benefit etc.

b) Price Range

c) Mode of Payment

d) Incentive ( for TG )

e) Guarantees-
f) Service :-

1) AMC ( Annual Maintenance contract ) If it is applicable to the case study

2 ) Free delivery (If it is applicable to the case study)
3) Toll free number
4 ) SMS
5) Website
6) App

g) Communication ( for TG .catalogue etc . )

h) Loyalty program

i) Welcome KIT

A lead generation program is often called a two-step approach (it is usually more than two steps,
or multi step). The first step generates the lead, the second (or third or fourth) step closes the sale.
An order generation program is often called a one-step approach. When the person responds, it is
not for more information. It’s to purchase the product.
Now everyone would prefer to use the one-step approach. It’s a quicker sale. No follow-up
needed. No sales people to pay. But the one-step can only be used with certain products –
products which can, in fact, be sold by a mail-order package, email, print ad or television
commercial. Not all products or services can be sold that way.
For other products customers need to meet with sales representatives perhaps for a
demonstration, presentation or consultation. And they will need to see a proposal or estimate
before they buy. Most of the products, like it or not, are stuck with the two-step approach.

2 ) Lead generation
a) One Step

1 )Direct Response Magazine

2) Direct mailers

164
3 )Personal selling ( B2C, B2 B and B21)
4 ) Trade fairs & Exhibitions ( B2C, B2 B and B21)

B ) two-step or multi-step approach.

1) Direct Response Newspaper Ads
2 )Hoardings with website address
3) SMS
4 ) Internet Ads
5 ) Leaflets
6) Direct mailers

3) Data Base Management

There are four main points in this . Write each points along with their sub points A.
Manage the Data Source

B. Manage the Data Entry:

C. Manage the Database

D. Manage the Database Applications

A ) Manage the Data Source.

This could be database bought from other providers such as cellular services, banks,
magazine subscribers, club membership holders, from Govt sources- such as pan card
holders, Adhar card , malls , Car registration sources, ration card, online portals such as
India Mart , Sulekha .com , Just dial , from Direct Marketing Syndicate tc. B) Manage the
Data Entry:
1) Verification
2) Validification
3) De – duplication
4) Merge- Purge
(Matchkeys & Soundex will be used for the above purpose)
C )Manage the Database
1) Mention whether data base will be managed In- house or bureau
2) Regular Audit based on , based on our customers purchasing patterns- RFM (Recency,
Frequency, Monetary).
3 ) Archive will be maintained
4) Track billings, delivery, payment , Cross sell, Up sell
D ) Manage the Database Applications

This will be managed thro’ the various application software such as DBMS. DFS, Oracle etc

165
 1) Customer Applications: ( media preferred , festive offers, anniversaries, Monitor
payments)
2) Management application ( Loyalty programs, cross sell , Up- sell )
3) ) Dialogue Applications ( call up customers & prospects to identify their
purchase needs, customization needs, to re-order, call up lapsed customers)
6 ) Methodology
Combination of these :
a) DRTV
b) DR Print ad
c) Catalogue
d) Direct mailers
e) Flyers
f) Internet ads
g) SMS
h) Website
i) Toll free number
j) Others
FINALLY TO MENTION THE DURATION OF THE CAMPAIGN AND THE BUDGET

CASE STUDY – MARKS ALLOCATION – FOR REFERENCE ONLY

APPENDED ARE THE MARKS ALLOCATION FOR CASE STUDY

A) Approach, TG & Product offering 4.0 mks
B) Lead generation 3.5 mks
C) Data base management 4.0 mks
D) Methodology 3.5 mks
_______________________________________________
TOTAL 15 MKS

Kindly note if students have written :

a) All pointers mentioned exceptionally well - 13 mks

b) All pointers mentioned but written well- 10 – 12 mks
c) Most of the pointers but written briefly - 8- 10 mks
d) Attempted but explained vaguely - 6-8 mks
e) Attempted - 4 – 6 mks

( THE POINTERS ARE JUST GUIDELINES FOR

166
CASE STUDY HOWEVER,S MARKS CAN BE
GIVEN AS PER THE DISCRETION OF THE
FACULTY )

167
168
169
170
171
172
173
174
175
176
177
178