CHAPTER FOUR

Direct marketing and Personal selling

4.1. Direct marketing

Direct marketing is a system of marketing by which organizations communicate directly with carefully
targeted customers to generate a transaction or any favorable response. In his Dictionary of Marketing
Terms, Peter Bennett defines direct marketing as the total of activities by which the seller directs efforts
to a target audience using one or more media (direct selling, direct mail, telemarketing, direct action
advertising, catalogue selling, email, and fax) to solicit a response.

Direct marketing is 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. Direct
marketing communications can include personal selling such as face-to-face sales, telemarketing, direct
response advertising, direct mail, internet, and catalogue. The objectives of the program are normally
behaviors—for example, test-drives, votes, contributions, attitudinal change, and/or sales.

4.1.1. Developing a Database

Market segmentation and targeting are critical components of any promotional program. The success of a
direct-marketing program is in large part tied to the ability to do one-to-one marketing. To segment and
target their markets, direct marketers use a database, a listing of actual & potential customers.

There are many sources of information for direct-marketing databases:

Census Bureau: Census data provide information on almost every household including household size,
demographics, income.

Cross Over Industries: These days, it seems that every time we make a purchase we are asked to give
our life histories. Many marketers subscribe to the notion that one’s current customers are also one’s
best potential customers.

List services: Many providers of lists are available. The accuracy and timeliness of the lists vary.

Postal Service: Postal Zip codes provide information on both household and business locations.

Market Research Bureau: conducts an annual study of customers who buy at home via mail or
telephone. It compiles information on total orders placed, types of products purchased, demographics, and
purchase satisfaction, and others.

The key to modern direct marketing is the capture of individual customer details at the first sale, so that
the marketer can begin a relationship with that customer, subsequently treating him/her differently over
time in order to generate repeat business. The database is a tool for database marketing (the use of
specific information about customers to implement more effective and efficient marketing
communications).
More sophisticated databases include information on demographics and psychographics, purchases and
payments, personal facts, neighborhood data, and even credit histories. Direct marketing approach by
using database forces a natural focus on customers rather than products.

Databases are used to perform the following functions:

• Improving the selection of market segments: Some consumers are more likely to be potential
purchasers, users, supporters. By analyzing the characteristics of the database, a marketer can target a
greater potential audience.

• Stimulate repeat purchases: Once a purchase has been made, the customer’s name and other
information are entered into the database. These people are proven direct-marketing users who offer high
potential for repurchase.

• Up selling: If customers are satisfied with the product they first bought, they will be favorably inclined
to purchase an upgraded item of the same brand i.e. be hot prospects for a higher priced versions of the
product.

• Cross-selling: Customers who demonstrate a specific interest also constitute strong potential for other
products of the same company.

Direct mail

Direct mail is often mistakenly seen as synonymous with direct marketing. It is one tool to implement
direct marketing approach. Compared to other media, there is no doubt over the impact value of direct
mail. As something with the customer’s address on it, coming through the door in the morning, it is hard
to ignore. However, one downside to direct mail’s impact is the poor public image as junk mail.

When used in acquisition of new customers, direct mail requires a list of target prospects. A key strength
of direct mail is its ability to use lasered letters to carry a different message to each recipient. Potentially
millions of different messages could be sent, according to each prospect or customer’s situation.

Telemarketing

The telephone in direct marketing is used in two ways. One is to make outbound calls to actual customers
and prospects, known as outbound telemarketing, and the other is using the telephone to take calls from
customers, known as inbound telemarketing. In terms of its ability to get messages through clutter, and in
terms of the receiver’s reaction to it as a medium, the telephone probably has great impact. It is very
difficult to filter out telephone marketing in the way people filter out other marketing communications.
However, compared to media like direct mail, the telephone can only be used for relatively short and
straightforward messages.

In telemarketing, the cost per contact on average is high which needs high responses. As a result,
outbound telemarketing is better used for high margin goods, or customers with high lifetime values.
Unlike outbound telephone promotion, which is viewed with heavy suspicion and hostility, inbound is
perceived positively by most consumers.

Catalogue marketing

Catalog marketing is a technique used by businesses to list items together in a printed piece or an online
hoping to sell items to the recipient. Consumers buy directly from the catalog sender by phone, return
envelope or online using information in the catalog. Some catalog marketers act as intermediaries; while
others develop their own develop their own catalogs.

Print Catalogs

A print catalog usually consists of a cover that announces what types of items the piece contains,
followed by the list of items with details. The catalogs contain photos and descriptions of the items, as
well as prices and ordering information. Ordering may happen via postage, telephone, email or any other
means. Catalog marketers use targeted mailing lists to increase sales and decrease the printing and
mailing costs associated with waste circulation. Some print catalogs are included with items shipped to
online buyers to generate additional sales.

Online Catalogs

To save on the cost of printing and mailing and to allow channel members to update product lists,
promotions, and prices more quickly, some businesses use an online catalog. The products are grouped
and displayed in a similar fashion to a print catalog, but consumers can sort items by price, category,
manufacturer or other criteria. These catalogs allow shoppers to compare various brands on the spot and
purchase.

Single company catalogs

Some companies with many products produce their own catalogs. The company might group similar
products to allow consumers with a specific interest to quickly find what they want, or they might spread
items throughout the catalog to make shoppers view more items, hoping to increase impulse buying.

Multiple company catalogs

Some catalogs feature products from a variety of companies, giving companies with fewer products a
chance to use catalog marketing. In these types of catalogs, you might see several competing products on
the same page. The producer of the catalog takes direct payment from the consumer, giving a portion of
the sale to the company after the money is collected. Some multi-company catalog marketers fulfill orders
from their warehouses, while others send orders to the firm to handle shipping and delivery of the item
and customer service.

• Direct response advertising

As tool in direct marketing, direct-response advertising presents to customers information the same as that
of advertising in order to directly obtain immediate order. For instance, you have probably seen TV
commercials for products in which the viewer is urged to phone a toll-free number, visit the advertiser’s
website, mail to place an order immediately. The goal is to generate an immediate sale when the ad is
shown.

• Personal selling

Personal selling can be defined as a two-way (dyadic), face-to-face communication used to inform, give
demonstrations to establish or maintain a long-term relationship with, or persuade specific members of a
particular audience.

In contrast to some of the other non-direct marketing communications tools, personal selling always
implies interaction with customers. It is an interpersonal communication tool that often involves face-to-
face contact. The latter should not be interpreted too strictly since telephone selling is also a form of
personal selling. This direct and interpersonal communication lets the sender immediately receive and
evaluate feedback from the receiver. This allows for more specific tailoring of the message to address the
receiver’s specific needs & wants.

Personal selling roles can be distinguished as follows.

a. Order Getters (attempt to persuade customers to place an order directly).

They sell to new customers and increase sales to present customers, sometimes called creative selling.
They constitute new business sales people; they win new business by identifying and selling to prospects
(most often people or companies who haven’t previously bought from the company).

b. Missionary sales people (do not directly receive orders since they talk to specifiers rather than
buyers). For example, Pharmaceuticals may go to doctors’ offices and persuade them to recommend
their products. This selling role is more cost effective per reach than the above persuading an individual
specifier means reaching many people under the influence of the specifier.

c. Order takers (respond to already committed customers)

Seek repeat sales, make certain that customers have sufficient product quantities where and when they
need it. Do not require extensive sales effort. Arrange displays, restocks, answer phone calls.

• Inside order takers receive orders by mail/email, phone or in person (sales persons in a retail store this
task).

• Field order takers travel to customers. They may collect persuaded orders and they check as to the
customers have enough of the product.

d. Support sales people: provide sales support to front line sales people. This group constitutes delivery
sales people, service salespeople (who interact with customers after transaction is completed).

Advantages of Personal selling

1. Interactivity: The ability to interact with the receiver allows the sender to determine the impact of the
message. Problems in comprehension or objections can be resolved and in-depth discussions of certain
selling points can be provided immediately.

2. Tailoring of the message: Because of the direct interaction, messages can be tailored to the receiver. It
is the most effective tool to vary the presentation according to the customers’ facial expression, and
other traits. This more precise message content lets the sender address the consumer’s specific concerns,
problems, and needs. The sales person can also determine when to move on to the next selling step.

3. Minimum distraction: In many personal selling situations, a one-to-one presentation is conducted.

The likelihood of distractions is minimized and the buyer is generally paying close attention to the sales
message. Even when the presentation is made by a group of salespeople or more than one decision maker
is present, the setting is less distracting than those in which non personal mass media are used.

4. Involvement in the decision process: Through consultative selling and relationship marketing, the
seller becomes more of a partner in the buying decision process, acting in conjunction with the buyer to
solve problems. This leads the buyer to rely more on the salesperson and his products.

5. Source of research information: In a well-integrated marketing department the sales force can be the
“eyes and ears” of the firm. Sales people can collect information on competitors’ products,
promotions, pricing, needs and wants of customer and prospects.

Disadvantages associated with personal selling

1. Inconsistent messages: Earlier we stated that the ability to adapt the message to the receiver is a
distinct advantage of personal selling. But, lack of a standardized messages can become a disadvantage.
The salesperson may alter the designed messages in ways the marketer did not intend.

2. Sales force/management conflict: Because of myriad reasons, the sales force and other marketing
staff may not be working as a team. The staffs may not understand each other’s problems, or the
salespeople may not understand other staffs do things the way they do. The result is that the sales force
may not use materials provided from marketing, marketing may not be responsive to the field ’s
assessment of customer needs, and so forth. At the end, poor communication will reach to customers.

3. High cost: As the cost per sales call continues to climb, the marketer may find mass communication a
more cost-effective alternative.

4. Poor reach: Personal selling cannot reach as many members of the target audience as other promotion
elements. Further, the frequency with which the accounts are reached is also low.

5. Potential ethical problems: Because sales managers do not have complete control over the messages
communicated by the salespeople and because income & advancement are often directly tied to sales,
sales people may bend the rules. They may say and do things they know are not entirely ethical or in the
best interest of the firm in order to get a sale.

Combining personal selling with other IMC tools

Each of the promotional mix elements both complements and is complemented by other promotional
tools. Accordingly, like the other promotional program elements, personal selling is rarely used alone;
rather this tool supports & is supported by other tools.

a.Combining personal selling with advertising

With specific market situations and communications’ objectives, the advantages of advertising make it
more effective in the early stages of the response hierarchy (creating awareness & interest), whereas
personal selling is more likely to be used in later stages (stimulating trial & getting order). Thus, each
may be more or less appropriate depending on the objectives sought.

Consider a new product introduction where the primary objective is awareness and a simple message will
suffice. In this case, advertising will likely be the most appropriate medium. Now suppose specific
benefits must be communicated that are not very obvious or easy to comprehend, and a product
demonstration would be useful. In this situation, personal selling deserves to result sales and establish a
relationship.

b.Combining Personal Selling and Public Relations

Personal selling involves much more than just selling products. The personal selling agent is often the
firm’s best source of public relations. In their day-to-day duties, salespeople represent the firm and its
products. Their personalities, servicing of the account, cooperation, and empathy not only influence sales
potential but also reflect on the organizations they represent.

Many firms encourage sales people to participate in community activities. For example, at times of
incidences like earthquake, fire, flood, airplane crash, etc. companies donate food and their sales forces ’
time to aid the victims in all necessities. These and other public relations activities result in goodwill
toward both the company and its products while at the same time benefiting society.

c.Combining Personal Selling and Sales Promotion

The program elements of sales promotion and personal selling also support each other. For example,
many sales promotion tools targeted to resellers are presented by the sales force. Likewise, many sales
promotions are targeted at the sales force itself. Incentives like free trips, cash bonuses, contests,
sweepstakes or gifts are often used to stimulate sales efforts.

d.Combining Personal Selling with Internet

Many managers feel that the Web will be used to fulfill the more mundane tasks of order fulfillment and
providing information. This in turn will allow the sales force to be more effective in receiving orders &
closing sale. A rapidly growing use of the internet is that of conducting online meetings in which the
sales force and/or customers participate, which saves money and time.

Internet

Companies of almost all sizes and all kinds have developed if not so far are developing websites to
provide information to users of Internet by the provider. Web or home pages are pages of information
placed within websites on the Internet. They can contain color, graphics, text, audio, video and animation.
Websites vary greatly in purpose and content. The most basic type is Corporate websites which are
designed to build customer goodwill and to supplement other sales channels, rather than to sell the
company’s products directly. From such sites, you can learn all about a company’s philosophy,
mission, current events, financial performance, company personnel, employment opportunities, products
and locations. Most corporate websites also provide entertainment features to attract and hold visitors.

Marketing websites on the other hand engage consumers in interactions that will move them closer to a
direct purchase or other marketing outcomes. Such sites might include catalogs which contain detailed
information about a company’s products. To attract visitors to the site and have them return to it
requires a combination of creativity, effective marketing, and continual updating of the site. Whether
people are online for work reasons or for personal reasons”, says a website design expert, “if a website
doesn’t meet their expectations, two/thirds say they don’t return-now or ever. This refers to internet
death penalty.

Unlike other media discussed, the Internet is actually a hybrid of media allowing marketers to accomplish
various communications objectives (create awareness, generate interest, influence attitudes, purchase and
sell products). Marketing communication mechanisms using internet More recently, the rapid growth of
the Internet is fueling the growth of direct marketing.

Banners

A graphic image or animation displayed on a web site for promotion. Banners are not limited to the space
that they occupy; some banners expand on mouse over or when clicked on. There are three types of
banners:

Keyword banners appear when a predetermined word is queried from the search engine. It is effective
for companies which want to narrow their target to consumers interested in particular topics. Random
banners appear randomly and might be used to introduce new products to the widest possible visitors, or
to keep a well-known brand. A major advantage of using banners is the ability to customize them to the
target audience. Keyword banners can be customized to a market segment or even to an individual. If the
computer system knows who you are, or what your profile is, you may be sent a banner that is supposed
to match your interests.

Interstitial banners are banners that are shown between pages on a web site. These ads appear on your
screen while you are waiting for a site’s content to download or as you click from one page to another,
you are shown this advert before the next page is shown. One of the major drawbacks of using banners is
that limited information is allowed. Hence, advertisers need to think of creative but short messages to
attract viewers.

Pop-ups and pop-under

As the name suggests, these are adverts that pop up or under the web page being viewed. They open in a
new, smaller window. They often appear when you access a certain site. Pop-ups are usually larger than a
banner but smaller than a full screen. Pop-unders appear underneath the web page and become.

Floating advert
This advert appears in a layer over the content, but is not in a separate window. Usually, the user can
close this advert. It looks very much similar to pop ups, but definitely more infuriating. It "flies"
anywhere around the page for 5-30 seconds, obscure view of the page you are trying to read, and often
block mouse input.

Wallpaper advert

This advert changes the background of the web page being viewed. Usually, it is not possible to click
through this advert. In the above internet-oriented promotions, the site may be responsible for providing
message content & having it approved by the sponsor (regular sponsorship); in other cases, the sponsor
not only provides money in return for name association but also participates in providing the content of
the adv itself (content sponsorship).

E-mail marketing

It is essentially an electronic version of regular mail. Like regular mail it is highly targeted, relies heavily
on defined lists, and attempts to reach consumers with specific needs through targeted messages. The
peculiar feature of internet marketing is its individualization and interactivity. Email marketers can
individualize messages as per the interests of their recipients.

Sometimes users may also receive less targeted and unwanted e-mails. The electronic equivalent of junk
mails, these messages are referred to as SPAM. When to send an email? Common sense tells you not on
Monday morning or Friday afternoon, but it varies by visitors. Testing will guide you. If the recipient has
given permission to receive marketing messages by email, then it is not spam.

Interactive TV

Interactive TV, or iTV allows the viewer of a television program to interact with the program and/or the
ads. Multi-tasking will allow television viewers to watch an event—for example, a football game—and
pull up information on players, history of the matchups between the teams, and other statistics without
ever leaving the couch or the game.

You simply drag your mouse over to an advertised product and click on it, and a window will appear
providing you with information regarding the product varieties, features, prices. You may then be asked if
you wish to order and what shipping arrangements you prefer. If you have previously ordered, you are
done, as your information has been stored in a database.

Advantages of internet media

Message tailoring: As a result of precise targeting, messages can be designed to appeal to the specific
needs of the target audience.

Interactive capabilities: Because the Internet is interactive, it provides strong potential for increasing
customer involvement and almost immediate feedback for buyers and sellers.

Information access: Perhaps the greatest advantage of the Internet is its availability as an information
source. Internet users can find a plethora of information about almost any topic, product specifications,
costs, purchase information, and so on. Links will direct them to even more information if it is desired.
Multi-tasking: the internet can achieve broad communication and sales objectives.

Creativity: Creatively designed sites can enhance a company’s image, lead to repeat visits, and
positively position the company in the consumer’s mind.

Speed: For those requesting information on a company, its products, and/or its service

4.1.1. Advantages of Direct Marketing

1. Selective reach: Direct marketing lets the marketer to reach a selected number of people and reduces
or eliminates waste coverage. Intensive coverage may be obtained through broadcast advertising. While
not everyone drives on highways where there are billboards or pays attention to TV commercials,
virtually every-one receiving a mail/email, SMS is likely to see the message.

2. Segmentation capabilities: Marketers can purchase lists of recent product purchasers. These lists may
allow segmentation on the basis of geographic area, occupation, demographics, and job title, to mention a
few.

3. Frequency: Depending on the medium used, it may be possible to build frequency levels. Frequency
may not be easily accomplished through mail, since consumers may be annoyed to receive the same mail
repeatedly.

4. Personalization: No other marketing medium can personalize the message. Parents with children at
different age levels can be approached, with their child’s name included in the appeal. Car owners are
mailed letters congratulating them on their new purchase and offering accessories. Computer purchasers
are sent software solicitations.

5. Traceability and measurability of marketing effectiveness Direct marketers offer potential or actual
customers the opportunity to respond to the marketing communication, usually within a given timeframe.
This helps marketers to track the response rate and response category (positive or negative) and prepare
analysis, based on which they can modify or streamline their marketing efforts for better results in future.
Using the cost per order (CPO), direct marketers can evaluate the relative effectiveness of the program in
only a few minutes based on the number of calls generated.

6. Easier campaigns: Most direct marketing campaigns and communications are easier and relatively
inexpensive to design. Direct marketing channels such as emails and text also make creating the
communication quicker and cheaper compared to massive advertising. This also makes it easier for direct
marketers to launch test campaigns in new markets as the costs & risks are considerably lower.

7. Costs effective market testing: direct marketing programs are beneficial to test consumer responses
with a small campaign before scaling up and launching a full, expensive campaign.

8. Some customers feel respect when they receive individualized messages directly.

4.1.2. Disadvantages of direct marketing:

1. Image factors: As we noted earlier, the mail segment of this industry is often referred to as junk mail.
Many people believe unsolicited mail promotes junk products, and others dislike being solicited. Many
consumers resent telemarketing and take the necessary steps to block telemarketing attempts, such as
opting out of calling lists.

2. Accuracy: One of the advantages cited for direct mail and telemarketing was targeting potential
customers specifically. But the effectiveness of these methods depends on the accuracy of the lists used.
People move, change occupations, and so on, and if the lists are not kept current, selectivity will decrease.

3. No content support: most direct marketing activities are unlikely to create a desirable mood to
customers through creativity if not internet.

4. Limited reach: While having a finite defined group of target customers acts as an advantage in many
ways by focusing marketing efforts, this can also be a restrictive factor insomuch as the marketers reach
stays limited. Despite database updates and addition of new customers, the reach of direct marketing can
never touch the reach of mass marketing methods.

5. Customers’ opposition: Critics of direct marketing cite junk mail, unsolicited email, telemarketing,
and the selling of names contained in a database as just some of the reasons for their discontent.

Traditional telemarketers and email marketers contact customers, without their permission, frequently
when the customers are busy. This does not leave customers with a positive feeling, nor does it put them
in the mood to buy the product being communicated. In case of websites and emails, customers decide not
to return to a given website if they find it unattractive. We call it internet death penalty.

Combining Direct Marketing with Advertising

There is no a single promotional tool which is independently perfect to result in the maximum
organizational accomplishment. All promotional mix elements complement each other. A print and
broadcast advertisement usually contain a toll-free, postal number and email that lead audiences to
respond.

Combining Direct Marketing with Public Relations

Public relations activities often employ direct-response techniques. Private companies may use
telemarketing activities to solicit funds for charities or cosponsor charities. Likewise, corporations
engaging in public relations activities may include toll-free numbers or websites in their ads or
promotional materials.

Combining Direct Marketing with Sales Promotions

It is common to receive a direct-mail or SMS notifying you of a sales promotion inviting you to
participate in a contest or sweepstakes. Alternatively, through direct mail you may be offered free
samples, gifts, club cards, etc which are sales promotion tools.