DIRECT MARKETING

What is meant direct marketing?

• Direct marketing consists of any marketing

that relies on direct communication or
distribution to individual consumers.
• The business of selling products or services
directly to the public, e.g. by mail order or
telephone selling, rather than through
retailers.
 Direct Marketing
• Interactive system of marketing
• Uses one or more communication media to
effect a measurable response and/or
transaction at any location
• Uses a set of direct-response media
Direct-response media: Tools by which direct
marketers implement the communication
process
 Factors that Led to the Growth of Direct
Marketing
• Development and expansion of the Postal
Service
• Consumer credit cards
• Changing structure of society and the market
• Technological advances
• Changing values and lifestyles
• More sophisticated marketing techniques
• The industry’s improved image
 Role of Direct Marketing in the IMC
Program
• Combines:
– Advertising and public relations
– Personal selling and sales promotions
– Support media
• Companies decide:
– Program objectives
– Which markets to target and the strategies to use
– How to evaluate the program’s effectiveness
 Direct-Marketing Objectives
• To seek a behavioral response
• To build an image
• To maintain customer satisfaction
• To inform and/or educate customers in an
attempt to lead to future actions
 Direct-Marketing Approaches
• One-step approach : Medium is used directly
to obtain an order
• Two-step approach : Uses more than one
medium
– First effort - Screens potential buyers
– Second effort - Generates the response
 Direct-Marketing Media
• Direct Mail
• Catalogs
• E-mail
• Broadcast Media
• TV Spots
• Infomercials
• Home Shopping
• Print Media
• Telemarketing
 Direct Mail
• Advertisers spend substantially on this
medium
• Keys to success
– Mailing list : Database from which names are
generated
– Ability to segment markets and offers
– Threat - The Internet
 Catalogs and E-mail
• Catalogs :
– Number of catalogs mailed is decreasing
– Available on the Internet for consumer and
business-to-business customers
• E-mail : Electronic version of regular mail
– Direct mail on the Internet
– Lower cost and higher effectiveness than
traditional direct mail
– Spam: Electronic equivalent of junk mail
 Broadcast media and TV spots
• Broadcast media
– Categories - Television and radio
– Direct-response advertising: Sales response for the
offered product is solicited, through the one- or
two-step approach
– Support advertising: Supports other forms of
advertising
• TV spots
– Short-form programs, include direct-response
commercials seen on TV
 Infomercial and Home Shopping
• Infomercial : Long commercial designed for
30-minute or 1-hour time slot
– Designed to be viewed as a regular TV show
– Effective with a broad demographic base
• Home shopping:
– Substantial growth due to toll-free telephone
numbers and widespread use of credit cards
 Print Media and Telemarketing
• Print media
– Difficult to use for direct marketing
– Ads compete with the clutter of other ads
– Space is relatively expensive
– Response rates and profits are low
• Telemarketing :
– Sales by telephone
– Declined due to its potential for fraud and
deception, and for annoyance
 Direct Selling
• Direct, personal presentation, and sales in
consumers’ homes
• Repetitive person-to-person selling - Salesperson
visits the buyer’s location to sell frequently
purchased products
• Non-repetitive person-to-person selling -
Salesperson visits the buyer’s location to sell
infrequently purchased products
• Party plans - Salesperson offers products to groups
of people through parties and demonstrations
 Evaluating the Effectiveness of Direct
Marketing
• Cost per order (CPO): Evaluates the relative
effectiveness of an ad based on the number of
calls generated
• Customer Lifetime Value (CLTV): Determines
the value associated with a long-term
relationship with a customer
– Helps determine if a customer should be acquired
– Optimizes existing customers’ service levels
 Advantages of Direct Marketing
• Targeting: You can send specific messages to particular groups of customers and
potential customers based on demographics and buying behavior. The more
targeted your campaigns, the more successful they are likely to be.
• Personalization: Reach your audience with a personal touch. Direct mail or
email can be addressed to a specific person, and even include details like past
orders. A phone call can engage a customer in conversation to start building a
relationship with your business.
• Affordable: Tactics like email marketing or leafleting can be very cost effective.
Most direct marketing will be more cost effective for SMEs than mass media
advertising campaigns.
• Measurable: If your marketing messages ask the recipient to take a particular
action or use a specific voucher code, you can easily track the success of
campaigns. This can help you plan future campaigns.
• Informative: You can deliver detailed information on your products, services and
prices unlike other forms of advertising.
 Disadvantages of Direct Marketing
• Intrusive: Many people find direct marketing annoying and intrusive. This is especially true
of telemarketing and door-to-door sales. Some people dislike marketing mail and consider
it to be 'junk mail'. If consumers find your marketing tactics annoying it can create a
negative brand association and make them less likely to buy. This is more likely with less
targeted campaigns.
• Environment: Using leafleting or paper-heavy direct mail campaigns can be bad for the
environment. To avoid this, and any negative impact on your brand image, use recycled
materials or try email campaigns.
• Low response rates: direct marketing response rates tend to be around 1% to 3%. When
you reach a consumer who isn't interested in your products or services, it wastes money
and they are likely to find it irritating. Use more targeted lists as opposed to sending out
mass messages to minimize this.
• Competition: It can be hard to make your messages stand out when the recipient receives
high number of marketing emails or direct mail.
• Cost: Tactics like telemarketing and direct mail may have high financial and resource costs.
• Legal issues: There are laws relating to privacy and data protection in digital marketing You
must ensure that your mailing list only contains individuals who have consented to receive
marketing messages from you.
 Limitations of Direct Marketing
• Direct sales typically comes with high costs.
• Developing and managing a sales team is
expensive.
• Consider the management and administrative
overhead costs plus payroll, bonuses and
other expenses.
• Even more, a direct sales strategy can be
difficult to scale.