D. Direct Marketing

Direct marketing consists of direct communications with carefully targeted individual consumers
to obtain an immediate response. Interactivity is essential to this process. The marketing manager
must remember that direct marketing is not new. Catalog companies, direct mailers, and
telemarketers have been using the approach for years. However, improved database technologies
and new media (computers, modems, fax machines, e-mail, the Internet, and online services) have
changed the direction and nature of direct marketing. Most direct marketers see direct marketing
as playing an even broader role than simply selling products and services. Mass marketing is
targeting broadly with standardized messages and marketing offers distributed through
intermediaries. Today, there is a trend toward more narrowly targeted or one-to-one marketing
(called direct marketing). This approach is being accepted as both a primary and supplemental
approach.

a. What is Direct Marketing?

Mass marketers have typically sought to reach millions of buyers with a single product and a
standard message delivered through the mass media. Under this mass-marketing model, most
marketing involved one-way Communications aimed at consumers, not two-way interactions with
them.
Direct marketing consists of direct communication with carefully targeted individual consumers to
both obtain an immediate response and cultivate lasting
Customer relationships. Direct marketers communicate directly with consumers, often on a oneto-
one, interactive basis. Today, improved databases permit more sophisticated direct marketing
and tailoring of marketing efforts. Beyond brand and image building, direct marketers seek a
direct, immediate, and measurable consumer response.

b. The New Direct Marketing Model

Early direct marketers--catalog companies, direct mailers, and telemarketers--gathered customer
names and sold goods mainly through the mail and by telephone. Today, advancement in database
technologies and new marketing media—especially the Internet and other electronic channels--
direct marketing has undergone a dramatic transformation. Direct marketing may be perceived as
being a distribution function (direct distribution) and a communication function (direct contact
with the consumer). Some firms use direct marketing as a supplemental medium. However, for
many companies today, direct marketing is more than just a supplemental channel or medium.
The Internet and electronic commerce now constitute a new and complete model for doing
business. Some say the Internet is the foundation for a new industrial order. Some firms (and the
number is growing) use the new direct model as their only approach. Experts envision the day
when all buying and selling will involve direct connections between companies and their
customers. The new model will change customer’s expectations about convenience, speed,
comparability, price, and service.

c. Benefits and Growth of Direct Marketing

Direct marketing brings many benefits to both buyers and sellers. As a result, direct marketing is growing very rapidly.

i. Benefits to Buyers

Direct marketing benefits buyers in many ways:
1). It is convenient.
2). Buying is easy and private.
3). Greater product access and selection.
4). Provides a wealth of comparative information.
5). Online buying is interactive and immediate.

ii. Benefits to Sellers

Sellers benefit by:
1). Direct marketing is a powerful tool for customer relationship building.
2). Direct marketing can also be timed to reach prospects at just the right moment.
3). Because of its one-to-one, interactive nature, the Internet is an especially potent marketing tool. Continuous relationships can be developed.
4). Reduce costs and increase speed and efficiency.
5). Online marketing offers greater flexibility.
6). The Internet is a truly global medium.

d. The Growth of Direct Marketing

Sales through traditional direct marketing channels have been growing rapidly.
Sales through direct marketing channels are growing at about 8 percent annually (as compared to
only 6 percent overall sales growths). Online marketing is growing explosively. Sales on the
Internet have been growing at about 60 percent per year for the last five years. Trends that seem to moving our society toward even more direct marketing include:
a). Degasification--focus is toward mini markets.
b). Lack of time and congestion. Higher costs of driving.
c).Growth of delivery services and the support infrastructure.
d). Growth of computer power and databases.
e) Growth has also occurred in the business-to-business sector.

e. Forms of Direct Marketing

Major forms of direct marketing are summarized below:

i. Face-to-Face Selling

The original and oldest form of direct marketing is the sales. Today, many companies’ still use salespersons or representatives to reach their prospects, develop them into customers, build lasting relationships, and grow the business.

ii. Telemarketing

In telemarketing telephone is used to sell directly to consumers. Two general types of telemarketing include:
1). Outbound telephone marketing to sell directly to consumers.
2). Inbound toll-free 800 numbers to receive orders from television and radio ads, direct mail, or catalogs. 900 numbers are used to sell consumers’ information, entertainment, or the opportunity to voice
an opinion on a pay-per-call basis. Many customers appreciate the offers they receive by telephone, however, because of the recent explosion in unsolicited telephone marketing, lawmakers are responding with efforts to control unsolicited telemarketing during certain hours of the day. Most telemarketers support some form of legislation.

iii. Direct-Mail Marketing

Direct mail marketing involves sending an offer, announcement, reminder, or other item to a
person at a particular address. Direct mail is well suited to direct, one-to-one communication.
Advantages include:
1). High target-market selection
2). Personalized.
3). Flexible.
4). Allows easy measurement of results.
Even though the cost per thousand can be high, the people who reached through direct marketing
are better prospects than those who reached with other media. New forms of direct mail include:
1). Fax mail.
2). E-mail.
3). Voice mail.

iv. Catalog Marketing

Catalog marketing involves selling through catalogs mailed to a selected list of customers or made
available in stores. A catalog is a printed, bound piece of at least eight pages, selling multiple
products, and offering a direct ordering mechanism. Some stores offer a complete line of goods
through their catalogs. Most direct retailers have put their catalogs on the World Wide Web. Web
catalogs are passive and must be marketed themselves.

v. Direct-Response Television Marketing

Direct-response television marketing takes one of two major forms.
1). Direct-response advertising occurs when marketers air television spots or
infomercials.
2). Home shopping channels are entire programs or channels dedicated to selling goods
and services.
In the near future, two-way interactive television and linkages with Internet technology will make
television shopping much different from what it is today and it will become one of the major
forms of direct marketing.

i. Kiosk Marketing

Some companies place information and ordering machines (called kiosks) in stores, airports, and
other locations (in contrast to machines which dispense products--vending machines). Business
marketers can also use kiosks (such as at trade shows). Kiosks are also going online as companies
merge real-world and virtual worlds of commerce. The Gap interactive kiosk is a great example of
this technology.

vii. Online Marketing and Electronic Commerce

Online marketing is conducted through interactive online computer systems, which link
consumers with sellers electronically.
There are two types of online channels:
1). Commercial online services offer information and marketing services to subscribers who
pay a monthly fee. The best known is America Online.
2). The commercial online services are now being overtaken by the Internet as the primary
online marketing channel. The Internet is a vast and burgeoning global web of computer
networks. The World Wide Web is a popular meeting place for consumer and business commerce.

• Rapid Growth of Online Marketing

Although still in their infancy, Internet usage and online marketing are growing explosively.
Electronic commerce is the general term for a buying and selling process that is supported by
electronic means. This would include electronic marketplaces (these are “market spaces” in
which sellers offer their products and services electronically, and buyers search for information,
identify what they want, and place orders using a credit card or other means of electronic
payment).

• The Online Consumer

The Internet user is not a pasty-faced computer nerd. As a whole, Internet users are an elite
group. They tend to be younger, more affluent, better educated, and more male than the general
population. However, female usage almost equals males. Net users come from all age groups,
about half are 40 years or older, they differ psycho graphically from the general population, and
they differ in their approaches to buying and in their responses to marketing. Teens are still a
targeted group. The seniors group is also expected to grow in the next several years.

• Creating Online Marketing

Marketers can conduct online marketing in four ways:

1).By creating an electronic online presence.

Using this method, a company can:
a). Buy space on a commercial online service.
b).Company can open its own Web site.
2). Web sites vary in purpose and content.
a).The most basic type is a corporate Web site. These sites are designed to handle
interactive communication initiated by the consumer. They seek to build customer good will and
to supplement other sales channels rather than to sell the company’s products directly.
b).The marketing Web site is designed to engage consumers in an interaction that will
move them closer to a purchase or other marketing outcome.
With this form of site, the marketer initiates communication and interaction.
3).Creating a Web site is one thing; getting people to visit the site is another. The key is to
create enough value and excitement to get consumers to come to the site, stick around, and come
back again. High involvement products (such as new cars, computers, or financial services) have
greater success than do lower involvement products.
The second method is to place advertisements online. Companies can place online
advertisement in several ways:
1) The company can put online ads that pop up while subscribers are surfing online services
or Web sites.
2). Content sponsorship allows a company to sponsor a specific report on one of the
services.
The third method is to participate in Forums, Newsgroups, and Web Communities.
1). Forums are discussion groups located on commercial online services.
2). Newsgroups are the Internet version of forums.
3). A Bulletin board system (BBS) is specialized online services that center on a specific
topic or group.
4). Web communities are sites that provide a place where members can congregate online
and exchange views on issues of common interest. Visitors to these Net neighborhoods develop a
strong sense of community. Web communities can be either social or work-related.
The final method is to use E-mail and Web casting.
The normal method used is to encourage prospects and customers to send questions, suggestions,
and even complaints to the company via e-mail. Quick response to such messages is a key.

The Promise and Challenges of Online Marketing

Online marketing offers great promise for the future but is still years away from reaching its
potential. Online marketing is still just one important approach to the marketplace. The Web is
still not a moneymaking proposition for many firms.
Challenges that online marketers face include:
1). Limited consumer exposure and buying.
2). Skewed user demographics and psychographics.
3). Chaos and clutter.
4). Security.
5). Ethical concerns.

f. Customer Databases and Direct Marketing

There are differences between mass marketing and so-called one-to-one marketing. A
customer database is an organized collection of comprehensive data about individual customers
or prospects, including geographic, demographic, psychographics, and behavioral data. The
database can be used to locate potential customers, tailor products and services to the special needs
of targeted customers or/and maintain long-term customer relationships.
Database marketing is the process of building, maintaining, and using customer database and
other database for the purposes of contacting and transacting with customers. A customer
database is much more than just a list of names (i.e., customer mailing list). Business-to-business
marketers and service retailers most frequently use database marketing.
Companies use their databases in four ways:
1). Identifying prospects.
2). Deciding which customers should receive a particular offer.
3). Deepening customer loyalty.
4). Reactivating customer purchases.
Like many other marketing tools, database marketing requires a special investment.