Direct Marketing

What is Direct Marketing ?

Direct marketing is a channel through which an organization communicates with its customers on one-to-one basis and sells its goods and services directly to them. Traditionally in marketing. organizations use indirect methods to reach large number of customers. Direct marketing approaches its existing customers who have participated in different events, on one-to one basis using various techniques like mail, internet or telephone. For this, organizers prepare a list of individuals who appeared at the event earlier and attain information regarding their demographic profile and preferences.

In order to encourage and motivate consumers to share their information, the organizations provide incentives like free entry ticket for an event or competition, etc. The list of potential event consumers can be purchased by the organizers from direct marketing agencies. While gathering customers information to create a database, an organization follows certain rules and guidelines to maintain the consumers/ privacy and gain their approval and trust. Thus, a clear understanding of regulations related to direct marketing is essential.

Organizers believe that direct marketing is the most effective method to approach their potential customers for marketing their events, Mostly, event organizers prefer those individuals with whom they had business relationship and their information is readily available with them. Whereas in some cases, a specific industry in a particular area is targeted by the event organizer and direct marketing is applied to focus on all the targeted industries in that particular area. Thus, direct marketing is considered the best way in both of the above situation. Moreover, it is the most economical way to reach the targeted event audience.

Definition of Direct Marketing

According to Direct Marketing Association of USA :
"Direct marketing is an interactive system of marketing which uses one or more advertising media to affect a measurable response and/or transaction at any location".

Functions of Direct Marketing 

Functions of directing marketing are as follows :

1) Communicating Quality : 
Direct marketing helps the marketers in communicating the benefits and attributes of the product or services in detail to the customer. Unlike advertising media (like print or broadcast media), direct marketing provides more support and tools to the marketers to promote their products. Hence, with direct marketing, a company is likely to efficiently communicate the reason why a product or a brand is better than the other, thus improving the quality image. The meanings of "value and quality' are different for different customers. Therefore, targeted direct marketing communication is far better than mass media options which are less targeted. A direct marketer's job is to stress on those characteristics and advantages which are valued the most by the audience, increasing the level of quality and value communicated.

2) Achieving Credibility : 
It is easy for a marketer to make claims about superior product quality. but it is hard to be believed. Direct marketing communication is better than that of mass media, as the direct marketer is in better position to understand and resolve customer objections and provide guarantee for satisfaction. This kind of interaction cannot be made with limited scope of mass media.

3) Frequency of Post-Sales Contact : 
An image for better quality products is attained through the frequent after-sales contact. Direct marketing helps the firms in cutting down the cost on after sales calls to observe and enhance consumer satisfaction. All these post-sale activities help the company in making it a leader in quality and technology (for example, through database mailing of newsletters).

Features of Direct Marketing

Targeting, Interaction, Control and Continuity (TICC) are the four features that are responsible for the success of direct marketing (Figure). This figure may either be viewed as four triangles or as a single triangle within the other one.

TICC Features of Direct Marketing

The above mentioned characteristics are as follows : 

1) Targeting : 
This includes selecting the message recipients, irrespective of the appropriate type of media being used (such as print media, direct mailing, broadcast media, or telemarketing of sale calls). Here, the target can be either existing or prospective customers or even large number of suspects.

2) Interaction : 
Interaction triangle is placed in the centre Interaction deals with the incentives or stimuli that the marketers offer in order to get a response from the target market. It also includes the response of the target market. Here the aim is to relate a response to appropriate stimuli.

3) Control : 
Control triangle relates to managing the marketing activity. It involves setting goals, preparing strategic and functional level plans. preparing budgets and evaluating outcomes. Control is a continuous process as the future goals are formulated on the bases of previous outcomes. The information under the interaction triangle should be accurate and complete for exercising control.

4) Continuity : 
Continuity deals with customer retention, cross-selling and continuous product up-gradation Maintaining accurate records of customer interaction helps the marketers in communicating with customers, recognizing their interests and appreciating their previous customs.

Growth of Direct Marketing 

Following points are responsible for the growth of direct marketing :

1) Advancement of Technology : 
The advancement of technology, especially computer-based technology has played an important role in the growth of direct marketing. The latest advancements in computer technology have helped the marketers in clearly analyzing the outcomes and also in targeting prospects based on more complicated attributes. These technologies have also helped in formulating more accurate and refined databases of existing as well as prospective customers. Due to technological growth, direct marketers have now found ways to creatively execute the direct mail packages.

2) Popularity of Phone : 
Rise in the number of customers placing orders over the phone has proved to be helpful in the tremendous progress of direct marketing. Telephone-based orders are complimented by speedy fulfillment of orders. In addition, delays caused due to traditional mail orders have also been removed. Nowadays, ordering over a telephone gives the similar immediate satisfaction as purchasing a product from a retail store. The scenario is no different in the case of online shopping However, still there are few customers who have apprehensions over providing personal and banking details on the Internet.

3) Increased Usage of Credit Cards: 
There has been a great progress in selling through mail order, after the birth of credit cards in 1950s. It improved and accelerated the transactions that were previously done with cash only. The availability of credit facility all over the world along-with electronic fund transfer benefit has altogether made direct marketing more feasible, viable, secure and convenient.

4) Changes in Consumer Lifestyle : 
With travel getting more costly and communication getting more affordable, there has been a significant rise in the use of phones, Internet, and mails. Sending catalogs over mail, providing toll-free numbers) and developing websites, make it convenient to shop from home. Moreover, since the number of working women has increased, proper time utilization has gained importance. Once a leisure activity, 'shopping has now become a mere duty, particularly in the families where both the members (husband and wife) are working. Mail-orders and Web are very helpful to such families or couples as these facilitate "anytime shopping".

5) Negative Aspects of Retailing : 
A number of customers have a liking for retail store shopping. However, conventional retail shopping has several adverse features that have contributed towards the growth of direct marketing. These involve distant locations, limited parking space, Involve long queues at check-out, security reasons, inadequate knowledge of clerical department, problems in finding salesmen, congested stores, problems in finding out best suited item and the hassle of carrying-out the heavy bags from the shops. With modern and convenient selling methods, direct marketing has become first. choice of large number of customers.

These social and technological aspects are not only responsible for increasing the popularity of direct marketing but these also have greatly impacted the way it works in the modern world.

Process of Direct Marketing

Types of Direct Marketing 

The number of Techniques or Tools of Direct Marketing used by direct marketers to approach the customers is as follows :

1) Mail Order Marketing/Catalogue Marketing : 
Mail Order Marketing (MOM) or Catalogue Marketing is a well-known method of direct marketing and is also referred as Mail Order Business (MOB). In this type of marketing catalogues of products and services are used by the marketers to communicate with the customers. These catalogues are also delivered to the customers via mail order to provide them information about the product.

2) Direct Mail Marketing : 
Direct Mail Marketing (DMM) is alike Mail Order Marketing (MOM). When a trading house markets its products via mail order, it is known as MOM. Whereas, when a manufacturing company markets its products or services by using mail order it is termed as In DMM, along with brochures/letters various other items are also mailed to the potential customers such gifts and compliments, free product samples, etc. Direct mail is less costly and less offensive than any other direct marketing promotional methods.

3) Telemarketing : 
Telemarketing is a marketing process of selling products and services via telephone. It deals with two types of markets, Le, Business to Business (B2B) and Business to Customer (B2C). The main function of tele operators is to contact existing customers and to attract new customers for taking orders or ascertaining their satisfaction level. If orders are taken on a daily basis then this is called Telesales. There are many customers who make orders for certain goods and services in routine. In order to handle routine calls, several companies have opened their call centers for inbound and outbound telemarketing. Inbound telemarketing is a process of receiving calls the customers and outbound telemarketing involves making calls to existing and potential customers for taking their orders.

4) Direct (Face-to-Face) Selling : 
Direct selling is different from direct marketing. In direct selling, a sales agent directly sells its product and services to customers door to door or at retail outlets through personal presentation demonstrations, etc. Whereas, direct marketing does not involve any sales agent, instead it is a process of establishing direct relationship with its customers. In direct selling. various sales personnel are appointed like stock brokers, insurance agents distributors working for direct-sales organizations such as Oriflame and Amway.

5) Direct Response Marketing (DRM) : 
Another tool used by marketers for direct marketing is direct response marketing. It is different from direct mail marketing only in terms of techniques used Various direct response marketing campaigns depend majorly on TV infomercials. Infomercials are the commercials which provide information regarding the product, its uses m benefits. Other techniques of direct response marketing are radio ads, print ads, flyers or e-mail.

6) Tele-shopping Home Shopping : 
Tele-shopping is the latest direct marketing tool, which is also known as home shopping. Here, the marketer commercializes its product or services broadcast media mainly TV and the consumers can view them on their TV and place orders for the required products by calling up at the given contact number. It is the easiest retail form where a product is demonstrated on television and the sale it made by placing orders on telephone.

7) Database Marketing : 
Database marketing also a method of direct marketing where databases of existing and potential customers are used to generate personalized communication helps in the promotion of products and services for marketing purpose. Database marketing also considered as an important element of Analytical CRM.

Policy Issues in Direct Marketing

Consumers and direct marketers generally have mutually rewarding relationships, but few complex issues are also involved. These are as follows :

1) Irritation : 
A large number of consumers may not prefer aggressive direct marketing practices. The most common are late night calls, calls by untrained callers, computerized calls, etc.

2) Unfairness : 
Often direct marketers exploit the impulsive and less clever customers, especially people of old age.

3) Deception and Fraud : 
A number of marketers create mailers and develop misleading copies. False prices, quality claims, exaggerated size of items, etc., are some examples of the deceptive means used by the direct marketers to lure the customers. There are several complaints registered every year with the Consumer Forum regarding sales frauds or false claims.

4) Invasion of Privacy :
Every time a customer orders over phone or Web, applies for credit card or subscribes for a magazine, his/her personal and banking details are revealed and may be attached to other companies databases.
In this way, the marketers get personal details of the customers and their way of living, and the same may often be used for wrong purposes.

Benefits of Direct Marketing

The various benefits or advantages of direct marketing are as follows :

1) Concentrated Approach : 
Through direct marketing, a marketer can easily identify a particular target market. For niche products, it is the most effective promotional tool because it targets only those products which respond promptly towards promotion. It involves less wastage of promotional efforts compared to others.

2) Economical : 
It is a very economical method for niche products. However, it proves to be costly compared to mass marketing promotional techniques.

3) Immediate and Flexible : 
One of the major advantages of direct marketing is its flexibility and immediate impact towards customer responses as it involves short lead time. While, other promotional methods consume a lot of time to reach their final execution stage, e.g., TV commercials.

4) Easy International Reach : 
If it is an international target market, then direct marketing is the most suitable method for promoting the products.

5) Tailored Messages : 
Direct marketing provides huge opportunities for designing personalized messages which are focused towards specific target customers.

6) Quick Delivery : 
Directing marketing is quick in attaining results which is most relevant for telemarketing. Telemarketing is one of the tools of direct marketing where the feedback collected from customer is considered sincerely to improve company's services and performance.

7) Multiple Uses : 
Apart from selling, direct marketing can also be used for other purposes like testing new markets, trail of new products, managing new customers needs, collecting information for future use, segmenting customer base or rewarding existing customers to build loyalty.

8) Easy to Manage and Control : 
It is relatively easy to manage and control marketing activities in direct marketing than in other promotional tools. Marketers can accurately evaluate the results as they know the number of customers that have been contacted in totality. On the basis of evaluation, marketers can also take corrective steps to improve their results in order to succeed. In addition, it also enables the marketer to plan, budget and forecast direct marketing campaigns for future.

9) Testing Capability : 
In direct marketing. promotional tools can be tested time and again, until the best combination of marketing tool found out. For this, the marketing variables like list of information, schemes or offers, timing. messages, etc. can be retested, modified and evaluated to find out the optimum direct marketing program.

10) Building and Maintaining Relationships : 
It is a very useful promotional technique to develop and maintain direct relationship with its potential or new customers. Moreover, this will help the marketers to generate demand for retailers by adopting it as a push-pull strategy.