The Principles & Practice of Direct Marketing. Chapter 1 Defining Direct Marketing & the Importance of Direct Marketing.
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- Peter Bennet
Direct Marketing involves all activities of marketing: Marketing Research, Segmentation, Target Marketing, Evaluation.
“ Direct marketing is an interactive system of marketing which uses one or more advertising media to effect a measurable response and/or transaction at any location.”
There are three key elements of this definition. They are as follows:
First, direct marketing is ‘interactive’ in that marketer and prospective customer engage in two-way communication. The response or non-response of the customer completes the communication loop in the direct marketing process. E.g. filling in the response coupon by the customer and mailing it. That is, direct marketing activities give the target market of the communication an opportunity to respond.
other information about individuals & households to analyze customer characteristics and plan new campaigns. These databases are the foundation of effective direct marketing.
WHY DIRECT MARKETING?
Combinations of Advertising & Selling: Direct marketers use paid messages in mass media to elicit a response from their prospective customer. In the process, the communication performs both an advertising and selling function without an intermediary. This makes it cost effective because it reduces intermediary mark ups to increase profits.
Precision targeting: Direct marketing communications are frequently aimed at individuals. This is particularly true of direct-mail and telemarketing campaigns based on the use of segmented lists that come from information contained in databases. Targeted marketing reduces the waste that occurs in other forms of communications.
consumer’s personal characteristics and/or past purchase behavior.
MASS MARKETINGONE TO ONE MARKETING
continuously of new mothers and sends personalized packages of gifts and advice at the key stages in the baby’s life.
Direct marketing strategies can be timed to reach prospects at the right time and moments. Thus, DM receives a higher readership because it is sent to more interested prospects.
Direct marketing strategies & offer benefit the marketer
since it is less visible to the competitors.
Direct marketing helps in building effective long-term relationships with the customers and this helps in getting customers to stay loyal.
The measurable response to direct marketing campaigns help to decide the more profitable ones.
1. Offer 2. Creative 3. Media 4. Timing/sequencing
5. Customer service
techniques, and production considerations such as personalization.
Customer Service: Customer service is an important aspect of DM. It leads to strong customer franchise and loyalty. Satisfaction with service is a prime consideration in customers’ repurchase decisions. In fact, many direct marketers consider expenditures on customer service and loyalty as an investment. The types of customer service that build businesses include speedy and accurate order fulfillment; prompt and satisfactory handling of customer inquiries and complaints; and a guaranteed return policy (such as- ‘if damaged/defective, email us at or write to us at-----’ or ‘to provide you a worry free shopping experience, we offer you a No Questions Asked Return Policy, within 7 days…..’). Other important elements of customer service are toll-free telephone numbers, money-back guarantees, and the acceptance of credit cards.
Flexibility- Direct marketing uses a variety of creative forms. A direct mail provides detailed information; direct-response TV advertising combines sound, sight and motion and allows product demonstration and so on.
Measures the Effectiveness- Direct marketing program measures the effectiveness of the activity effectively. The feedback generated is immediate and accurate. This helps in the measurement of the DM activity.
Computerization has improved the currency of lists, yet the ability to generate lists remain a problem.
Requires highly skilled staff to analyze each customer profile – In Direct marketing communications, individual customers should be addressed by name & title. Also information from database is used to produce specific appeal based on consumers personal characters &/or past purchase behavior. It is therefore important that the profile of each individual customer is accurately maintained. This would be possible only if the staff employed is highly competent to carry out this accurately.
For successful implementation of direct marketing program, a company needs to take a number of decisions. It is important to determine:
RFM- Recency, Frequency, Monetary transactions between the company and the customer.
It is important to enter the data each time a transaction is made. The company can keep a track of :
Tracking which products/services are used increases the ability to track the customer population & develop effective marketing strategies.
Direct Marketing- Direct contact with customers through emails, telephone, direct mail or Direct response using mass media such as TV, Internet.
Direct Mail- Fax mail. Email, Voice mail, Solo mails, Product catalogue/ brochures.
Developing long-term loyalty: By targeting the right customers, offering them what they want and encouraging them to take more of your products, you will protect your customer database. Your customers will be more likely to stay with you for longer.
(ii) increased conception of the market.
(i) Business environment (ii) Competitive analysis- who are they? Entry barrier. (iii) Customer-market segments- SEC, demographics, psychographics, identifying TG. (iv) Product-use behavior- heavy & medium user. (v) Product & market phase (vi)Evaluating past performance- % response rate, sales, no. of requests for information, no. of qualified leads, new customers acquired, lapsed customers, customer acquisition cost (ratio of marketing cost &
• Business to consumers
• Business to intermediaries
• Business to business
Approaches to Direct Marketing
This could be regarded as the “ultimate" Direct marketing approach. Organizations that employ this type of approach employ no other means to manage the relationship with their customers. Companies such as ‘First Direct’, ‘Direct Life insurance’ or Bazee.com
fall under this category. Here the customers are directly recruited via direct response press advertising, direct mail or the internet. There after, the relationship is managed using a combination of telephone, mail, e-mail etc.
In this approach Direct Marketing is viewed as a part of an integrated marketing mix. Organizations such as 'Save the child', 'Readers Digest', ‘Pizza-Hut’ are seen to adopt this approach.
In this type of approach, Direct Marketing is employed as only an occasional, tactical marketing tool. Here direct marketing could be initiated as a short-term response to decreasing sales or competitive pressures. Hindustan Lever and many other FMCG companies adopt this form.
Internal AnalysisExternal Analysis
Promotional dept. orgzn. Consumer behavior
Firm’s ability to implement Market segmentation &
promotional program target marketing
Agency evaluation & Market positioning
Review of previous program
IMC considers all sources of brand or company contact that a customer/prospect has with a product/service. It is a way to coordinate and manage the marketing communications program to ensure that they give customers a consistent message about the company and/or its brands.
Consumers’ perceptions- a synthesis of the bundle of messages they receive- media advertisements, price, package design, direct marketing efforts, publicity, sales promotion, websites, POP displays & the store itself.
IMC is a centralized messaging function.
Direct Marketing is a form of advertising through mail, print or TV- Direct response ad.
Direct marketing makes use of online promotions through websites, interactive CDs/DVDs/kiosks to
seek a response or complete a sale. Online catalogues promote the product/service to elicit a response.
Public relations activities and Publicity oriented activities employ direct marketing & direct response techniques.
Telemarketing & direct selling is an aspect of Personal selling. In multi-stage selling, direct mailers are used to invite prospects or after direct selling efforts, direct mailers are sent as a follow-up & reminder.
Direct mailers inform a prospect of sales promotion events/activities or invites a prospect by way of contests & prizes & gifts as incentives. In sales promotion implementation, direct marketing tools are employed to inform customers.