Direct Marketing

Direct Marketing
DM is a system of marketing by which organizations communicate directly

With target customers to generate a response or transaction.
This response may take the form of an  Inquiry  A purchase or even a  Vote.

As per Peter Bennett DM is:
The total activities by which seller, in effecting the exchange of goods and services with the buyer, direct its efforts to a target audience, using one or more media viz:  direct selling,  direct mail,  telemarketing,  direct action advertising,  catalogue selling,  cable TV selling etc for the purpose of soliciting a response by phone, mail or personal visit from a prospect or customer.

Difference between DM & DM-media DM‡ DM is an aspect of total marketing i.e. it involves  marketing research,  Segmentation,  Evaluation( just same as in marketing process). DM also uses a set of Direct Response Media Media,  including direct mail,  telemarketing,  interactive TV,  print,  the internet and other media. These media are the tools by which direct marketers implement the communication process.

Growth of DM
‡ DM has been around since the invention of printing press in the 15th century. ‡ Ben Franklin (in 1700¶s) and Warren Sears & Montgomery ward were using this medium in 1880¶s. ‡ The major impetus behind the growth of DM have been the development & expansion of U.S. Postal Services which made catalogs available to both urban & rural dwellers. ‡ Catalogs revolutionized America¶s buying habits; consumers could now shop without even leaving their homes.

Growth of DM
Factors responsible for the growth of DM are:

1. Consumer credit cards
(feasible for consumers to purchase both high & low ticket items)

2. Direct marketing syndicates
(companies specializing in list development, statement inserts, catalogs & sweepstakes have opened many new opportunities to marketers)

3. Changing structure of society & the market
(rapid increase in nuclear & dual income families i.e. ³money rich & time poor´ families)

4. Technological advances
(electronic media & computers)

5. Misc.factors

Role of DM in IMC program
Combining with:  Advertising Advertising: DM is in itself a form of advertising-whether thru mail, print or TV, the direct response offer is an ad.  It usually contains toll free number or a form that request mailing information.  Sometimes the ad support the direct selling effort.  Direct response ads or informercials are also referred to in retail outlet displays.

Role of DM in IMC program
Public Relations: PR activities often employ direct response techniques. Private companies may use telemarketing activities to solicit funds for charities or cosponsor that use these and other direct response techniques to solicit funds. Direct response ads or infomercials are also referred to in retail outlet displays.

Role of DM in IMC program
Personal Selling:
Telemarketing & direct selling are two methods of personal selling.  Non profit organizations like charities often use telemarketing to solicit funds.  Profit organizations also use telemarketing with much greater frequency to screen and qualify prospects and to generate leads.  Direct mail pieces are often used to invite prospective customers to invite customers viz to their showrooms to product testing. (viz-cars/auto industry use this )

Role of DM in IMC program
Sales Promotions: Mail announcement of special end-of-season sales end-ofsales. Airlines send out mailers or ±emails announcing promotional airfares. Retail outlets call their existing customers to notify them of special sales promotions. Above examples are of direct marketing tools to inform customers of sales promotions. Sales promotion event may support direct marketing effort.

Role of DM in IMC program
Support Media: Adding a promotional product to a direct mailer has proved to increase response rates vizincluding promotional product in half of its 10,000 mailers and not in the other half.

A firm must take following decisions

to successfully implement direct marketing programs:
1.What program objectives will be 2.Which markets to target 3.What direct marketing strategies will be employed 4.How to evaluate the effectiveness of the program.

Direct Marketing Objectives
The objectives of the programs are behaviors viztest drives, votes, contributions and /or sales. Many organizations use DM to build an image, maintain customer satisfaction & inform or educate customers in an attempt to lead to future actions.

Developing a Database
Success of direct marketing program is in large part tied to the ability to do one-to one marketing. To segment and targets their markets, direct marketers use-Database, a listing of customers/potential customers. This database is a tool for Data

base marketing -

the use of specific information about individual customers and /or prospects to implement more effective & efficient marketing communications.

Contents of a Comprehensive Database
Consumer Database
Name Address/Pincode Telephone number Distance of Residence Age Gender Marital status Family data Education Income Occupation Transaction history Promotion history Inquiring history Unique identifier

Business to Business Database
Name of company/contact/decision maker Title of contact Telephone number Source of order/inquiry of referral Credit history Industrial classification Size of business Revenues Number of employees Time in business Headquarters location Purchase history Promotion history Inquiring history Unique identifier

Functions of Database
This database serves as the foundation from which the DM programs evolve. Data base are used to perform the following functions:  Improving the selection of market segments  Stimulate the repeat purchase  Cross sell
(customers who demonstrate a specific interest also constitute strong potential for other products of same nature) 

Customer relationship management

Direct Marketing Strategies & Media
Marketers must decide the message to be conveyed, size of the budget and so on. The major difference between direct marketing (DM) programs & other promotional mix programs regards is the Use of Media. Direct marketing employs a number of media, including  Direct Mail  Telemarketing  Direct response broadcasting  Internet &  Print Each medium is used to perform specific functions, although they all generally follow a One

or Two Step approach.

Step Approach
One Step Approach:
order.  The medium is used directly to obtain an order Viz work out equipments or magazine subscriptions in which the viewer is urged to phone a toll free number to place an order immediately. Usually these ads accept credit cards or cash on delivery and give an address. 
The Two Step Approach use more than on medium. The first effort is to designed to screen or qualify potential buyers. The second effort generates the response. Viz many companies use telemarketing to screen the basis of interest and then follow up to interested parties with more information designed to achieve an order or use personal selling to close the sale.

Junk Mail 
Often called as ³Junk mail´-the unsolicited which we receive, often used in auto industry, cars and credit cards industry.  Key to the success of junk mail is the mailing list, which constitutes the database from which the names are generated and the ability to segment markets.

It is one of the major participants of direct marketing.  The number of catalog mailed and the number of catalog shoppers have increased significantly in developed countries, but in India it is at infancy stage.  Many companies use catalog in conjunction with their traditional sales & promotional strategies.  In addition to hard copies, catalogs are now available on the Internet for both consumer & b-2-b customers.
e.g of Catalogs marketing in Indian context

Broadcast media 
Two broad cast media are available to direct marketers: TV & Radio.  Radio was used extensively in 1950¶s & 1960¶s quite extensively, its use and effectiveness have dwindled substantially in recent years.  Majority of DM broadcast advertising now occurs on TV, which receives the bulk of our attention.  Two step approach is very common on the radio, particularly with local companies.

Broadcast media
‡ DM in the broad cast industry involves both Direct Response Advertising & Support Advertising. ‡ In Direct Response Advertising, the product/service is offered and a sales response is solicited, through either one or two step approach. e.g. ads for magazine subscription, CD¶s & tapes and tips on personal health equipments on various channels viz-Zee TV Sky shop. ‡ Toll free numbers are provided so that receiver can immediately call to order.
Pic of direct response marketing

Support Advertising
Support Advertising:  Is designed to do exactly that support other forms of advertising.  Ads for publishers clearing house or Readers Digest or other companies telling you to look in your mail box for a sweepstakes entry are examples of support advertising.

The lower cost of commercials on cable & satellite channels has led advertisers to a new form of advertising.  An infomercial is along commercial that ranges from 30 to 60 minutes.  Many infomercials are produced by the advertisers and are designed to be viewed as regular TV shows.

TV Advertorials
It is first step into TV programming by developing a series of advertorials to show the public its entire model range viz cars e.g. developing a a series of 5 minute films positioning the autos/cars as ³The drive of your life´ while providing comprehensive information on Test drives, technical specifications and demonstrations.

‡ The development of toll-free numbers combined with widespread use of credit cards, as lead to a dramatic increase in the number of people who shop via their TV sets. ‡ Jewelry, Kitchenware, fitness products, insurance, compact discs and a variety of items are now promoted. viz Zee TV sky shop

Print Media
Magazines and news-papers are difficult media to use for direct marketing, because these ads have to compete with clutter of other ads and because the space is relatively expensive, response rates and profits may be lower than in other media.

Telemarketing or sales by telephone.  Both profitable and charitable organizations have employed this medium effectively in both one and two step approaches.  B-2-B marketers like Adobe systems 7 HP are using the DM system effectively.  Potential problems with telemarketing include its potential for fraud and deception for annoyance.

Electronic Tele-shopping Tele‡ Electronic tele-shopping is an on line shopping and information retrieval service accessed through potential computers. ‡ Also called as e-commerce.

Direct Selling
An additional element of direct marketing program is direct selling, the direct personal presentation, demonstration and sales of products & services to consumers in their homes. Viz-Avon. Tupper ware, Amway are some of the best known direct selling companies. Three forms of direct selling are:  Repetitive person to person selling  Non repetitive person to person selling  Party Plans

Advantages of DM
Selective Reach (lets the advertiser reach a large number of people &
reduces the waste coverage) 

Segmentation capabilities (marketers can purchase list of recent
product purchase, car buyers, bank card holders & so on) 

Frequency (depending on the medium used it may be possible to build
frequency level, viz direct response TV advst are inexpensive hence can be repeated) 

Flexibility (can take variety of creative forms)  Timing (direct response advertising can be much more timely, viz Direct  Personalization  Costs  Measure of effectiveness

mail can be put together very quickly and distributed to the target population)

Disadvantages of DM
Image factors (viz Junk mail-people believe that unsolicited mail
promotes junk products) 

Accuracy (effective-ness of these methods depends on the accuracy
of the lists used) 

Content support (ability of the magazines to create mood
contributes to the overall effectiveness of the ads they carry, direct mail and on line services are unlikely to create a desire-able mood) 

Rising costs

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