Direct Marketing

What is Direct Marketing?

Direct marketing is a channel free approach to distribution and/or marketing communications. So
a company may have a strategy of dealing with its customers 'directly,' for example banks (such
as CityBank) or computer manufacturers (such as Dell). There are no channel intermediaries i.e.
distributors, retailers or wholesalers. Therefore - 'direct' in the sense that the deal is done directly
between the manufacturer and the customer

As mentioned above, 'direct' also in the sense that marketing communications are targeted at
consumers by the manufacturers. For example, a brand that uses channels of distribution would
target marketing communications at wholesalers/distributors, retailers, and consumers, or a blend
of all three. On the other hand, a direct marketing company could focus upon communicating
directly with its customers. Direct marketing and direct mail are often confused - although direct
mail is a direct marketing tool.

There are a number of direct marketing media other than direct mail. These include (and are by
no means limited to):

 Inserts in newspapers and magazines.

 Customer care lines.
 Catalogues.
 Coupons.
 Door drops.
 TV and radio adverts with free phone numbers or per-minute-charging.
 ...and finally - and most importantly - The Internet and New Media.

The Internet and New Media (e.g. mobile phones or PDA's) are perfect for direct marketing.
Consumers have never had so many sources of supply, and suppliers have never had access to so
many markets. There is even room for niche marketers - for example Scottish salmon could
ordered online, packed and chilled, and sent to customers in any part of the world by courier.

Many companies use direct marketing, and a current example of its use, as part of a business
model, is the way in which it is used by low-cost airlines. There is no intermediary or agent,
customers book tickets directly with the airlines over The Internet. Airlines capture data that can
be used for marketing research or a loyalty scheme. Information can be processed quickly, and
then categorised into complex relational databases.

Then, for example, special offers or new flights destinations can be communicated directly to
customers using e-mail campaigns. Data is not only collected on markets and segments, but also
on individuals and their individual buyer behaviour. Companies such as Amazon are wholesalers
of books (i.e. they do not write or publish them) - so they use Customer Relationship
Management and marketing communications targeted directly at individual customers - which is
another, slightly different example of direct marketing

The term marketing implies the single goal of profit. It is categorized into two, direct marketing
and indirect marketing and there is a significant line of difference between the two. Direct
marketing is basically business from manufacturer to consumer without the involvement of
middlemen, whoever it is. This is generally done by mailing the consumer or contacting him
directly, so he can know about the products. The use of media advertisements is very limited and
whatever little use is made includes only the demonstration of their products with call back
numbers. Direct marketing is a boon and a bane, both in some respects:

Advantages:

- Direct marketing involves direct business. So it is cost beneficial for consumers, as there is no
price hike due to wholesalers or retailers.
- Marketing executives can state certainly of the exact response to their products.
- The profit or loss can be more accurately judged.

Flexible Targeting
Direct marketing enables you to talk directly identify, isolate and communicate with well-
defined target markets. This means you get a higher conversion and success rate than if you tried
communicating to everyone in the mass market. And direct marketing is also far cheaper than
mass market communication.

Multiple Uses
Direct marketing doesn't just have to be used to sell - it can be used to test new markets and trial
new products or customers, to reward existing customers to build loyalty, collect information for
future campaigns, or segment a customer base.

Cost-Effectiveness
The cost per acquisition of direct mail can be significantly less than other marketing methods.
Plus once you've acquired a customer, you can also benefit from highly profitable repeat sales,
gained once again through direct marketing methods.

Ease of Management
Direct marketing provides greater control and accountability than other marketing methods. It is
easy to measure results because you know exactly how many people you've contacted in the first
place. Once you've run a direct marketing campaign and know the conversion rates involved, you
can work on refining and improving your success rates. Plus it also makes it easier to plan,
forecast and budget for future direct marketing campaigns.

Rapid Delivery
Direct marketing is both swift 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.
Testing Capability
Direct marketing allows you to test, test and test again in order to hit upon the most successful
combination of direct marketing tools. Any of these variables such as timing, list, message,
mailer and offer can be adjusted, tested again, and measured to find the optimum direct
marketing proposition.

Relationship Building
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.

Targeting of Messages
Direct marketing can enable you to target different messages to different recipients. Using
technology such as digital printing, it's even possible to display different images, designs and
offers in a direct mailer according to who it's being sent to, as well as personalising the mailer to
the recipient to increase conversion rates.

Geographic Targeting
Direct marketing can be used for any level of geographic targeting, whether it's the local area
surrounding a shop or restaurant, regional targeting by postcode or county, national targeting and
even international - when direct marketing can prove a far cheaper way of testing the market than
a costly personal sales visit.

Disadvantages:

- Sometimes, direct mailing offends the customers and many do not endorse it as they say it
inhibits their private lives.

But most marketing managers are in support of this kind of business. The various forms in which
direct business is made are:

- Direct mailing: Here, paper mails are sent to the selected groups of people, who likely to give
positive response e.g. the paper mails of latest food processor is sent to all homes where house
wives are resident so that immediate response is seen. Also CDs can be used as demonstrating
media.

- Email Marketing: Here, emails are sent to all the selected customer categories with repeated
intervals of time. But most of these are put into trash and spams. So the effectiveness of this form
cannot be predicted.

- Telemarketing: In telemarketing, calls are made directly to the consumers and the concerned
product is advertised. People sit at call centers to sell products on behalf of their clients. But this
form of direct business is quite unpopular and most people oppose the uninvited calls. It was
initially made illegal but later on new laws were re-enforced and calls are now made only to
those who don't mind them.
- Voicemail: Telemarketing created a lot of consumer opposition and consumers would abuse the
ones advertising on the phones. In order to avoid this, voicemail marketing was introduced,
wherein; the entire advertisement is digitally recorded and presented.

- Use of coupons: Coupons are attached to direct mails and sent to the consumers. These
generally advertise and give cost benefit to the consumers. So they avail these coupons and
respond fast.

- Television marketing: Advertisements are given on the television and demos are with toll-free
call back numbers or certain websites for the consumer to get in touch with the manufacturers.

- Broadcast faxing: This is the least popular form of direct marketing. The ads are directly faxed
to the consumers.

Direct marketing can thus become successful only if the entanglements with the consumer are
good. It can be B2B or B2C. It measures exact consumer response.

In the international market direct marketing has evolved through the catalogue route. It was the
catalogue marketer of the 1930s who set the pace, but it took direct marketing several decades to
reach its present-day multimedia, interactive modes status. In India, direct marketing was
launched on the mail-order platform in the 1950s.but the growth in the earlier days was sluggish
and the practice was confined to only a product categories. Most major developments in this area
took place only after the consumer boom in the mid 1980s.

Direct marketing in India has since grown by leaps and bounds. With the advent of competition
in the 1990s, several firms such as Philips, Telco, Titan and BPL who were earlier marketing
their product through conventional channels only are now turning to direct marketing to
strengthen their marketing efforts and increase their consumer base. They are integrating direct
marketing with conventional distribution to get closer to their customer.

FACTORS CONTRIBUTING TO THE GROWTH OF DIRECT MARKETING :

The following major factors have contributed to the quick growth of direct marketing in
India:

Successful replication of overseas products and marketing practices in India.

Eureka Forbes made history of sorts in India by successfully marketing vacuum cleaners through
door-to door selling. The firm had, in fact not done anything new. It had only been replicating
here the strategy, which was earlier used in the European markets quite successfully.
Nevertheless, its success in India provided a role model for other firms to emulate.

Change in the Indian business environment due to liberalization

Some major changes in the Indian business environment, especially after 1991, made the
domestic markets for many consumer and industrial products more competitive. For the first
time, several business firms that were well entrenched in their markets felt the heat of
competition. It was now essential for them to get closer to the customers to protect their markets.
Many of them, such as Onida, HMV, BPL and Titan who were selling their products only
through agents and middlemen, switched to a parallel channel of direct marketing by opening
several exclusive retail shops. The aim was to keep in direct touch with the customers and
provide certain services that were not being provided by the middlemen.

Another objective of opening exclusive showrooms was to build an up-market image of the
company by demonstrating the full range of products. The ambience and décor of the exclusive
showrooms also helped these firms in adding value to their brands. LML Vespa, Liberty shoes,
Bausch& Lomb eye care products and several others ventured into direct retailing probably due
to this reason alone. Service firms such as ITC Hotels and ANZ Grindlays Bank found direct
marketing very effective in retailing customers and weathering competition.

Middlemen getting stronger.

Several firms such as those in the publishing business, are now increasingly opting for direct
marketing to reduce their costs of distribution. Over the years, middlemen in India have become
very strong and demanding. In pharmaceuticals, IMFL (Indian made foreign liquor), packaged
food and several other industries, the market is in fact controlled by middlemen, who dictate
terms to manufacturers. In the FMCG category any new firm wanting to enter the market is
virtually at the mercy of middleman.  Because of higher mark-ups the cost of distribution for
products like soft drinks, confectionery, ice-cream and frozen goods has gone up to the extent
that in some cases it is even higher than the cost of production. If the trend continues, it may
prompt many more firms to check the direct marketing alternative.

Another reason for the spurt in direct marketing activities is that dealers usually push brands
selectively, depending upon their equation with the manufacturers. Therefore to protect their
brands from discrimination and to get direct aces to the market, more and more firms are now
opening their exclusive showrooms, especially in large cities and towns.

Advent of cable television.

Proliferation of satellite television channels and the resultant rise in cable TV connections in
urban and semi-urban India has offered an excellent opportunity for marketing firms to exploit
this new high-tech medium for direct communication. Teleshopping firms such as Dee’s
Teleshopping, Teleshopping Networks (TSN) and Asian Sky Shop (ASS) are now marketing
jewellery, toys, cosmetics, watches, leisure products, domestic gadgets, car finance and many
more products and services through their small screen.

The USP of Teleshopping is the convenience of shopping from home and getting the goods
delivered at one’s doorstep. The selection of products to be marketed through Teleshopping,
therefore, depends largely on the target audience and the timing of the programme. As this
medium of retailing is relatively new to Indian firms, companies are mostly concentrating on
unique household items and targeting up-market housewives.

Large database maintained on computers

Computers have provided the real boost to direct marketing by facilitating maintenance of large
database on consumers. With the enormous computing power at their command, firms can now
store update and use large quantities of data for profiling and individualizing their customers.
Computer based analytical techniques such as non-parametric multidimensional scaling and
perceptual mapping have helped firms in segmenting their markets and targeting their customers.

Taking advantage of computing power, firms like Johnson & Johnson, for example have created
a database of more than 10,000 mothers in Mumbai, each with a baby less than two years old.
They have collected this data from hospitals and maternity homes. Nestle have carried out
similar exercises in other metros for its Cerelac brand infant food. ITC Welcome Group Ltd has
complied a detailed database on all CEOs and senior managers in the country. This included
details about each individual’s travel pattern, destination frequently visited, and choice of food
and accommodation. Telco is reported to have put together an immense database on 145000 bus
and truck owners around the country.

In fact, database-directed marketing has become a potent weapon for acquiring a competitive
edge in products and services where differentiation between brands is difficult. A bold, powerful
and direct personal communication that adds value to the product and establishes a lasting
relationship with the customer is now possible due to computerization. Ability to file, amend and
retrieve data has changed the procedures, prospects and profitability of direct marketing.

Direct Marketing is superior to other forms of mass marketing in that it allows you to reach your
audience and speak to them, one-to-one. With mass media advertising (TV, radio, print) you
reach a larger audience, but have no way of knowing if you are speaking to people who are
interested in, receptive to, or even appropriate for your product or service. Direct Marketing is
the only form of marketing that lets you pinpoint your audience at an extremely precise level and
gives you measurable results. With Direct Marketing you have:

 Targetability. You can precisely identify the audience that's appropriate for your
message, and personalize/customize messages for each potential customer.
 Efficiency. By marketing only to the target audience, you know that your advertising
dollars are being directed to the people who are most likely to take advantage of your
product or offer.
 Flexibility. Mail/email your message at any time, using any format (postcard, letters,
brochures, free samples, gift items, etc). Because direct marketing pieces can be prepared
in a relatively short time, they can give you the competitive edge of surprise or the
capacity to respond quickly to a competitor's effort. You can prepare and send a postcard
in a matter of days. The choice is up to you and your budget.
  Measurability/accountability. Know exactly how many pieces of mail or emails you sent,
who received them, how much each piece costs to send, and how many responses you
received. And because you can prove it works, it becomes its own justification. Whatever
your business goals, Direct Marketing is a proven and cost effective way to help your
business grow. Studies show that, on average, every dollar spent on Direct Marketing
advertising brings in $10 in sales. And, consumers are receptive to Direct Marketing.
Over 50% of recipients read it immediately and of those, 40% found the information they
received useful.*

Channels
Direct mail

The most common form of direct marketing is direct mail sometimes called junk mail, used by
advertisers who send paper mail to all postal customers in an area or to all customers on a list.

Junkmail

Any low-budget medium that can be used to deliver a communication to a customer can be
employed in direct marketing. Probably the most commonly used medium for direct marketing is
mail, in which marketing communications are sent to customers using the postal service. The
term direct mail is used in the direct marketing industry to refer to communication deliveries by
the Post Office, which may also be referred to as "junk mail" or "admail" and may involve bulk
mail.

Direct mail includes advertising circulars, catalogs, free trial CDs, pre-approved credit card
applications, and other unsolicited merchandising invitations delivered by mail or to homes and
businesses, or delivered to consumers' mailboxes by delivery services other than the Post Office.
Bulk mailings are a particularly popular method of promotion for businesses operating in the
financial services, home computer, and travel and tourism industries.
In many developed countries, direct mail represents such a significant amount of the total
volume of mail that special rate classes have been established. In the United States and United
Kingdom, for example, there are bulk mail rates that enable marketers to send mail at rates that
are substantially lower than regular first-class rates. In order to qualify for these rates, marketers
must format and sort the mail in particular ways – which reduces the handling (and therefore
costs) required by the postal service.

Advertisers often refine direct mail practices into targeted mailing, in which mail is sent out
following database analysis to select recipients considered most likely to respond positively. For
example a person who has demonstrated an interest in golf may receive direct mail for golf
related products or perhaps for goods and services that are appropriate for golfers. This use of
database analysis is a type of database marketing. The United States Postal Service calls this
form of mail "advertising mail" (admail for short).

Telemarketing

Another common form of direct marketing is telemarketing, in which marketers contact

consumers by phone. The unpopularity of cold call telemarketing (in which the consumer does
not expect or invite the sales call) has led some US states and the US federal government to
create "no-call lists" and legislation including heavy fines. This process may be outsourced to
specialist call centres.

In the US, a national do-not-call list went into effect on October 1, 2003. Under the law, it is
illegal for telemarketers to call anyone who has registered themselves on the list. After the list
had operated for one year, over 62 million people had signed up.[4] The telemarketing industry
opposed the creation of the list, but most telemarketers have complied with the law and refrained
from calling people who are on the list.[citation needed] (The list does not apply to non-profit
organizations.)

Canada has passed legislation to create a similar Do Not Call List. In other countries it is
voluntary, such as the New Zealand Name Removal Service.

[edit] Email Marketing

Email Marketing is a third type of direct marketing. A major concern is spam. As a result of the
proliferation of mass spamming, ISPs and email service providers have developed increasingly
effective E-Mail Filtering programs. These filters can interfere with the delivery of email
marketing campaigns, even if the person has subscribed to receive them,[5] as legitimate email
marketing can possess the same hallmarks as spam. There are a range of e-mail service providers
that provide services for legitimate opt-in emailers to avoid being classified as spam.

Door-to-Door Leaflet Marketing

Leaflet distribution services are used extensively by the fast food industries, and many other
business focussing on a local catchment. Business to consumer business model, similar to direct
mail marketing, this method is targeted purely by area, and costs a fraction of the amount of a
mailshot due to not having to purchase stamps, envelopes or having to buy address lists and the
names of home occupants.

Broadcast faxing

A fourth type of direct marketing, broadcast faxing, is now less common than the other forms.
[citation needed]
This is partly due to laws in the United States and elsewhere which make it illegal.
[citation needed]

Voicemail Marketing

A fifth type of direct marketing has emerged out of the market prevalence of personal voice
mailboxes, and business voicemail systems. Due to the ubiquity of email marketing, and the
expense of direct mail and telemarketing, voicemail marketing presented a cost effective means
by which to reach people directly, by voice.

Abuse of consumer marketing applications of voicemail marketing resulted in an abundance of

"voice-spam", and prompted many jurisdictions to pass laws regulating consumer voicemail
marketing.

More recently, businesses have utilized guided voicemail (an application where pre-recorded
voicemails are guided by live callers) to accomplish personalized business-to-business marketing
formerly reserved for telemarketing. Because guided voicemail is used to contact only
businesses, it is exempt from Do Not Call regulations in place for other forms of voicemail
marketing.

Another variation is voicemail courier (an application where pre-recorded voice messages are
couriered into voicemail by live callers) to accomplish personalized voicemail marketing.
Voicemail courier is used for both business-to-business marketing and also business-to-consumer
applications.

Couponing

Couponing is used in print media to elicit a response from the reader. An example is a coupon
which the reader cuts out and presents to a super-store check-out counter to avail of a discount.
Coupons in newspapers and magazines cannot be considered direct marketing, since the
marketer incurs the cost of supporting a third-party medium (the newspaper or magazine); direct
marketing aims to circumvent that balance, paring the costs down to solely delivering their
unsolicited sales message to the consumer, without supporting the newspaper that the consumer
seeks and welcomes.

Direct-response television marketing

Direct marketing on TV (commonly referred to as DRTV) has two basic forms: long form
(usually half-hour or hour-long segments that explain a product in detail and are commonly
referred to as infomercials) and short form, which refers to typical 30-second or 60-second
commercials that ask viewers for an immediate response (typically to call a phone number on
screen or go to a Web site).

TV-response marketing—i.e. infomercials—can be considered a form of direct marketing, since

responses are in the form of calls to telephone numbers given on-air. This both allows marketers
to reasonably conclude that the calls are due to a particular campaign, and allows the marketers
to obtain customers' phone numbers as targets for telemarketing. Under the Federal Do-Not-Call
List rules in the US, if the caller buys anything, the marketer would be exempt from Do-Not-Call
List restrictions for a period of time due to having a prior business relationship with the caller.
Firms such as QVC, Thane Direct, and Interwood Marketing Group then cross-sell and up-sell to
these respondents.

One of the most famous DRTV commercials was for Ginsu Knives by Ginsu Products, Inc. of
RI. Several aspects of ad, such as its use of adding items to the offer and the guarantee of
satisfaction were much copied and came to be considered part of the formula for success with
short-form direct-response TV ads (DRTV)

Direct selling

Direct selling is the sale of products by face-to-face contact with the customer, either by having
salespeople approach potential customers in person, or through indirect means such as
Tupperware parties.

Popularity of Direct Advertising

A report[6] produced by the Direct Marketing Association found that 57% of the campaigns
studied were employing integrated strategies. Of those, almost half (47%) launched with a direct
mail campaign, typically followed by e-mail and then telemarketing.

Direct marketing is the new ad mantra

Mumbai: Advertisers are turning increasingly to direct marketing to communicate with
consumers as they attempt to save on costs and ride out the economic downturn, a business
opportunity that ad agencies are trying to tap.

UK-based Aegis Group Plc has tied up with independent agency Fresh IMCS and Dentsu India
launched a unit in partnership with an outsourcer, Serco BPO Ltd, to offer direct marketing
services.
Direct communications, with its arsenal of mailers, brochures, road shows, sampling, events,
phone calls, emails and digital contacts, is favoured by advertisers as a cost-effective, measurable
medium in these times, when companies are trying to cut costs.

It throws open direct lines of communication to consumers, who can interact with the brand or
advertiser.

Media specialists such as Deepak Jayaram, national director, dialect, GroupM India Pvt. Ltd,
estimate the one-on-one communications market at Rs1,000 crore-plus yearly, with likely annual
growth of 15-20%.

The figure is significantly higher than a few years ago, he says, and does not include mom-and-
pop direct agencies that operate from home.

“There is potential for agencies to get a lot more direct marketing business since much of it is
spread out in small mom-and-pop outfits. It’s a disintegrated business,” says Debashis Das,
country head of Carat Fresh, as the venture between Aegis Group and Fresh ICMS is known.

The medium will thrive in the years to come because it offers complete measurability—a
company should know exactly how many people have been contacted and how many of them
have opted for a product, he adds.

Below-the-line promotional techniques, which involve non-media communication such as group

events, are also becoming important in the marketing mix of many companies.

Vandana Verma, country head of Celsius (integrated events and solutions), Mudra Group narates
how it recently took on a below-the-line campaign for PepsiCo Holdings India Ltd for which the
budgets topped Rs1.5 crore.

The company had a 350ml variant of Diet Pepsi called the Fat Can and wanted to launch a new
can variant called the Slim Can. It enlisted Bollywoord actor John Abraham for the 20-day
promotion in which he performed mass workouts with people in malls and multiplexes across
Mumbai, New Delhi and Bangalore.

The event resulted in the beverage maker getting at least 40,000 calls asking about the mass
workouts within the first 10 days of the campaign, says Verma. Still, it is advertisers with
stretched budgets that are actually driving non-traditional marketing.

“Advertisers are re-negotiating ad budgets this year because of the economic downturn,” says
Satish Sathyanarayana, chief operating officer of ClozR, the venture launched by Dentsu India
with Serco BPO.

They are looking beyond creating awareness now and need engagement not just with consumers
but also with intermediaries such as dealers and distributors, he says.
Personal care products maker Emami Ltd will be spending more money on direct marketing. “In
these times, advertisers are looking to communicate directly to distributors and consumers about
the benefits of their products. Also, you get the conversion numbers easily, if they are converting
to a product,” says Aditya Agarwal, director, Emami Group.