Everything you need to know about what is direct marketing. Direct marketing has spread in recent years.
All kinds of organizations use direct marketing. Its growing popularity in consumer marketing is largely a response to the ‘demassification’ of mass markets, which has resulted in an ever greater number of fragmented market segments with highly individualized needs.
Direct marketing allows sellers to focus efficiently on these minimarkets with offers that better match specific consumer needs.
Direct marketing helps the seller build a continuous relationship with each customer. Direct marketing also provides privacy —the direct marketers offer and strategy are not visible to competitors.
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Direct marketers can use a large variety of tools to reach potential customers, from traditional face-to-face to Internet on-line selling.
Learn about:- 1. Meaning of Direct Marketing 2. Characteristics of Direct Marketing 3. Types 4. Channels 5. Tools 6. Examples 7. Challenges 8. Advantages and Disadvantages.
What is Direct Marketing: Meaning, Characteristics, Channels, Tools, Advantages and Disadvantages
Contents:
- Meaning of Direct Marketing
- Characteristics of Direct Marketing
- Types of Direct Marketing
- Channels of Direct Marketing
- Tools of Direct Marketing
- Examples of Media for Direct Marketing
- Challenges of Direct Marketing
- Advantages and Disadvantages of Direct Marketing
What is Direct Marketing – Meaning
A form of advertising in which physical marketing materials are provided to consumers in order to communicate information about a product or service. Direct marketing does not involve advertisements placed on the internet, on television or over the radio. Types of direct marketing materials include catalogs, mailers and fliers.
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Investopedia explains ‘Direct Marketing’ as; direct marketing removes the “middle man” from the promotion process, as a company’s message is provided directly to a potential customer. This type of marketing is typically used by companies with smaller advertising budgets, since they cannot afford to pay for advertisements on television and often do not have the brand recognition of larger firms.
Direct marketing messages emphasize a focus on the customer, data, and accountability. Hence, besides the actual communication, creation of actionable segments, pre- and post-campaign analytics, and measurement of results, are integral to any good Direct Marketing campaign.
Mail order pioneer Aaron Montgomery Ward used the technique of selling products directly to the customer at appealing prices and executed effectively and efficiently. It revolutionized the market industry and therefore, used as an innovative model for marketing products and creating customer loyalty.
The term “direct marketing” was coined long after Montgomery Ward’s time. In 1872, Aaron Montgomery Ward produced the first mail-order catalog for his Montgomery Ward mail order business. In 1967, Lester Wunderman identified, named, and defined the term “direct marketing”. Wunderman considered to be the father of contemporary direct marketing – is behind the creation of the toll-free 1800 number.
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Direct marketing uses various advertising media to interact directly with consumers. Mass advertising reaches an unspecified number of people, most of whom are not in the market for a product. Direct advertising is used to obtain immediate orders directly from targeted consumers. Selection of merchandise through the use of a catalogue, ordering through the mail and delivery by similar means is the major characteristics of direct marketing.
Direct marketing has spread in recent years. All kinds of organizations use direct marketing. Its growing popularity in consumer marketing is largely a response to the ‘demassification’ of mass markets, which has resulted in an ever greater number of fragmented market segments with highly individualized needs. Direct marketing allows sellers to focus efficiently on these minimarkets with offers that better match specific consumer needs.
Other developments have led to the growth of direct marketing. With the increasing number of women entering the workforce the time households have to shop has gone down. The higher costs of driving, the traffic congestion and parking problems and the longer lines at checkout counters all have promoted in-home shopping.
The development of free telephone calls (in Singapore, local are free) and the increased use of credit cards have helped sellers reach and transact with consumers outside of stores more easily. Last but not least, the growth of computer power has allowed marketers to build better customer databases from which they can select the best prospects for specific products.
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Direct marketing provides many benefits to consumers also. People who shop through direct mail, online or on telephone say that these shopping options are convenient and hassle-free. It saves time, introduces a new lifestyle and facilitates a larger selection of merchandise.
Consumers can compare products and prices from their armchairs by browsing through catalogues. They can order and have the products without having to leave their homes. Industrial customers can learn about and order products and services without spending valuable time by meeting and listening to salesmen.
Direct marketing helps the seller build a continuous relationship with each customer. Direct marketing also provides privacy —the direct marketers offer and strategy are not visible to competitors.
What is Direct Marketing – 4 Major Characteristics: A Set of Database, Addressing the Listed Customers, Direct Action Related and Specific Emphasis
Characteristic # 1. A Set of Database:
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A database of names (prospects, customers, businesses, etc.), often with certain other relevant information such as – contact number/address, demographic information, purchase habits/history, company history, etc., is used to develop a list of targeted entities with some existing common interests, traits or characteristics. Generating such a database is often considered part of the Direct Marketing campaign.
Characteristic # 2. Addressing the Listed Customers:
Marketing messages are addressed directly to this list of customer and/or prospects. Direct marketing relies on being able to address the members of a target market. Addressability comes in a variety of forms including email addresses, phone numbers, Web browser cookies, fax numbers and postal addresses.
Characteristic # 3. Direct Action Related:
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Direct marketing seeks to drive a specific “call to action.” For example, an advertisement may ask the prospect to call a free phone number, mail in a response or order, or click on a link to a website.
Characteristic # 4. Specific Emphasis:
Direct marketing emphasizes trackable, measurable responses, results and costs from prospects and/or customers – regardless of medium. Direct marketing is practiced by businesses of all sizes – from the smallest start-up to the leaders on the Fortune 500. A well-executed direct advertising campaign can prove a positive return on investment by showing how many potential customers responded to a clear call-to-action.
General advertising avoids calls-for-action in favor of messages trying to build prospects’ emotional awareness or engagement with a brand. Even well-designed general advertisements rarely prove their impact on the organization’s bottom line. The demonstrable result of Direct Marketing is the reason for its increasing popularity.
What is Direct Marketing – 3 Important Types: Direct mail Marketing, Catalogue Marketing and Telemarketing
Type # 1. Direct Mail Marketing:
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Direct mail marketing uses mails and e-mails to promote products and services to the target customers. The e-mail may contain information regarding offers, announcements or reminders. This kind of marketing is popular because it provides flexibility and can be personalized. While developing a direct mail marketing campaign, marketers need an appropriate and clear objective, justified target customers, offer elements, and have an optimal way of measuring campaign success.
Type # 2. Catalogue Marketing:
Catalogue marketing is a form of direct marketing which uses printed catalogues or e-catalogues to display all the products and services provided by the company. It is a replacement to the customer visiting a retail store to check out the relevant products. It helps the customers to buy directly from the provider.
Type # 3. Telemarketing:
Telemarketing is a marketing technique which includes the usage of telephones and call centers to convey information about products and services to the customers and for providing proper assistance, by taking orders and answering queries. It is specially used in business-to-business marketing and consumer marketing.
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Lessons Learnt by Direct Marketers:
The Strategy – Eureka Forbes structures its demos according to the time at the customer’s disposal.
The Lesson – Keep the process flexible enough to accommodate individual needs.
The Strategy – Modi Telstra uses a clearly structured sales call process to market its cellphone services.
The Lesson – Simplify the process of negotiation to save the customer’s time.
The Strategy – Oriflame uses multilevel marketing to enlist direct sales agents from its customer base.
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The Lesson – Use your customer to sell your product to other customers.
The Strategy – INDAL empowers its sales force to take pricing decisions on the spot when closing sales.
The Lesson – Ensure that your direct seller can conclude a deal immediately.
What is Direct Marketing – Media Employed in Direct Marketing: Email Marketing, Online Marketing, Mobile, Telemarketing, Voicemail Marketing and a Few Others
The following media are commonly employed in the direct marketing:
i. Email Marketing:
Sending marketing messages through email or email marketing is one of the most widely used direct-marketing methods. One reason for popularity of email marketing is that it is relatively inexpensive to design, test and send an email message. It also allows marketers to deliver messages around the clock and to accurately measure responses.
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ii. Online Tools:
With the expansion of digital technology and tools, direct marketing is increasingly taking place through online channels. Most online advertising is delivered to a focused group of customers and has a traceable response.
a. Display Ads are interactive ads that appear on the Web next to content on Web pages or Web services.
b. Social Media Sites, such as – Face book and Twitter, also provide opportunities for direct marketers to communicate directly with customers by creating content to which customers can respond.
iii. Mobile:
Through mobile marketing, marketers engage with prospective customers and donors in an interactive manner through a mobile device or network, such as – a cell phone, smart phone, or tablet. Types of mobile marketing messages include – SMS (short message service) – marketing communications are sent in the form of text messages, also known as texting. MMS (multi-media message service) – marketing communications are sent in the form of media messages.
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iv. Telemarketing:
Another common form of direct marketing is telemarketing, in which marketers contact customers by phone. The primary benefit to businesses is increased lead generation, which helps businesses increase sales volume and customer base. The most successful telemarketing service providers focus on generating more “qualified” leads that have a higher probability of getting converted into actual sales.
v. Voicemail Marketing:
Voicemail marketing emerged from the market prevalence of personal voice mailboxes, and business voicemail systems. Voicemail marketing presented a cost effective means by which to reach people directly, by voice. Voice-mail courier is a similar form of voice-mail marketing with both business-to-business and business-to-consumer applications.
Broadcast faxing – Broadcast faxing, in which faxes are sent to multiple recipients, is now less common than in the past.
vi. Couponing:
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Couponing is used in print and digital media to elicit a response from the reader. An example is a coupon which the reader receives through the mail and takes to a store’s checkout counter to receive a discount.
vii. Direct Response Marketing:
Direct Response Marketing is designed to generate an immediate response from consumers, where each consumer response (and purchase) can be measured, and attributed to individual advertisements.
viii. Direct Response Mail Order:
Mail order in which customers respond by mailing a completed order form to the marketer. Mail order direct response has become more successful in recent years due to internet exposure.
ix. Direct Response Television:
Direct marketing via television (commonly referred to as DRTV) has two basic forms – long form (usually half-hour or hour-long segments that explain a product in detail and are commonly referred to as infomercials) and short form, which refers to typical 30-second or 60-second commercials that ask viewers for an immediate response (typically to call a phone number on screen or go to a website).
x. Direct Response Radio:
In direct response radio, ads contain a call to action with a specific tracking mechanism. Often, this tracking mechanism is a “call now” prompts with a toll-free phone number or a unique Web URL. Results of the ad can be tracked in terms of calls, orders, customers, leads, sales, revenue, and profits that result from the airing of those ads.
xi. Direct Response Magazines and Newspapers:
Magazine and newspaper ads often include a direct response call-to-action, such as – a toll-free number, a coupon redeemable at a brick-and- mortar store, or a QR code that can be scanned by a mobile device – these methods are all forms of direct marketing, because they elicit a direct and measurable action from the customer.
What is Direct Marketing – Most Important Tools: Face-To-Face Selling, Direct Mail, Telemarketing, Email Marketing, Voicemail Marketing, Couponing and a Few Others
Direct marketers can use a large variety of tools to reach potential customers, from traditional face-to-face to Internet on-line selling.
The most important tools of direct marketing are as follows:
Tool # 1. Face-to-Face Selling:
It remains the preferred tool in business-to-business markets, where firms, having a limited and well- identified number of prospects, use their sales force to locate them and to develop them into customers.
Tool # 2. Direct Mail:
The term “direct mail” is used to refer to communications sent to potential customers or donors via the postal service and other delivery services. Direct mail is sent to customers based on criteria such as age, income, location, profession, buying pattern, etc.
Direct mail includes advertising circulars, catalogs, free- trial CDs, pre-approved credit card applications, and other unsolicited merchandising invitations delivered by mail to homes and businesses.
Tool # 3. Telemarketing:
Another common form of direct marketing is telemarketing, in which marketers contact customers by phone. The primary benefit to businesses is increased lead generation, which helps businesses increase sales volume and customer base.
Tool # 4. Email Marketing:
Sending marketing messages through email or Email marketing is one of the most widely used direct- marketing methods. One reason for email marketing’s popularity is that it is relatively cheaper mode of direct marketing.
Tool # 5. Voicemail Marketing:
Voicemail marketing emerged out of the market prevalence of personal voice mailboxes, and business voicemail systems. Voicemail marketing presented a cost effective means by which to reach people directly, by voice.
Tool # 6. Couponing:
Couponing is used in print and digital media to elicit a response from the reader.
Tool # 7. Digital Coupons:
Manufacturers and retailers make coupons available online for electronic orders that can be downloaded and printed. Digital coupons are available on company websites, social media outlets, texts, and email alerts. There are an increasing number of mobile phone applications offering digital coupons for direct use.
Tool # 8. Direct Response TV:
Direct marketing via television (commonly referred to as DRTV) has two basic forms- long form and short form, which refers to typical 30-second or 60-second commercials that ask viewers for an immediate response.
TV-response marketing i.e. infomercials can be considered a form of direct marketing, since responses are in the form of calls to telephone numbers given on-air. This allows marketers to reasonably conclude that the calls are due to a particular campaign, and enables them to obtain customers’ phone numbers as targets for telemarketing.
Tool # 9. Direct Selling:
Direct selling is the sale of products by face-to-face contact with the customer, either by having salespeople approach potential customers in person, or through indirect means such as Tupperware parties.
Tool # 10. Grassroots/Community Marketing:
The door-to-door distribution of flyers and leaflets within a local community is a business-to-consumer form of direct marketing used extensively by restaurants, fast food companies, and many other businesses focusing on a local catchment.
Tool # 11. Insert Media:
Another form of direct marketing, insert media are marketing materials that are inserted into other communications, such as a catalog, newspaper, magazine, package, or bill. Coop or shared mail, where marketing offers from several companies are delivered via a single envelope, is also considered insert media.
Tool # 12. Direct Response Radio:
In direct response radio, ads contain a call to action with a specific tracking mechanism. Often, this tracking mechanism is a “call now” prompt with a toll-free phone number or a unique Web URL. Results of the ad can be tracked in terms of calls, orders, customers, leads, sales, revenue, and profits that result from the airing of those ads.
What is Direct Marketing – Examples of Media: Mailing, Newspaper Inserts, Press Advertising, Magazines, Televisions and a Few Others
The media basket for direct marketing is very large and includes a variety of media. Any media which generates response is a legitimate direct market media.
Example # 1. Mailings:
Mostly, the mailing is printed matter sent by book post. Second class mailings save on postage. The savings can be used to improve the quality of the material being mailed. Though book post letters are not given preference in delivery, we have to time them in such a manner that the message reaches on the right occasion – Deepavali offer should not cross Deepavali time.
The sense of timing is a matter of experience. Sometimes, decoy mail is sent to business associates and friends to get a feel of the time taken for delivery.
Mostly, the actual mailing is handled either by couriers or letter specialist shops.
Urgent messages, fund raising messages and high rate of returned mail take us to use first-class mail. It is used for preferred customers. It adds a personal touch to the mailings. It ensures mail delivery. It prepares the buyers to anticipate a major offer through second-class mail. It is used to acknowledge orders.
Example # 2. Newspaper Inserts:
These are not much in vogue here; though they are used to reach a large audience at a competitive cost abroad. Such inserts can be made geographically selective, but they lack demographic selectivity.
Some inserts are distributed as a part of Sunday newspapers. Free-stand inserts are printed by the media itself. Inserts require a careful cost-benefit analysis.
Example # 3. Press Advertising:
In direct marketing, frequency is more important than the size of the ad. A quarter page ad which pulls customers is .reduced further in size to check results of each such insertion.
After identifying the market, we can increase the size and improve the frequency of appearance of the ad.
The direct mailings contain a variety of pieces, whereas newspaper ad copy is one-piece. However, the only similarity between the two is the AIDA- Attention, Interest, Desire and Action hierarchy. Both expect the customer to go through.
The ad copy is designed by the advertiser and he controls the movement of the eyes of the reader, and so his pattern of reading. The mailings, however, may get scattered, and may not be read as the marketer expected the reader to read them.
Newspaper ads must describe the products; carry a coupon for responding, a guarantee or a no-obligation statement in case of a free offer and a mention of telephone ordering or credit card buying.
Direct marketers also use classified ads which are easy to design and develop. Such ads are keyed to identify the media that pulls most messages.
Example # 4. Magazines:
Magazines offer demographic selectivity – they reach the target audience we have in mind. They support our direct mailings. Direct mailing to subscribers of a magazine and the advertising in the same magazine is a powerful combination. Magazines have durability unlike the newspapers which are read only on a particular date.
There are two types of magazines – general and special. We have to make a careful choice, keeping in mind our target audience and the nature of our product.
Size of the ad and the placement of the ad also deserve careful consideration. Covers are costlier and are not advised for mail order response ads with a coupon, because the audience might not like to disfigure a magazine by tearing a coupon on the cover. Some magazines carry a special mail order section.
Postcards of mail order called bin-in cards are attached to magazines. Such cards can accompany the ads. It is a matter to be studied whether such cards generate additional enquiries.
Example # 5. Television:
August E. Grant bills TV retailing consisting of TV shopping networks, infomercials and direct response advertising as the most pervasive of all forms of electronic marketing.
Most mail order companies use TV as a supplementary medium either to their direct mailings or newspaper ads. TV lends an identity to the other direct marketing efforts. While buying TV time, we have to consider whether to buy 10 seconds, or 30 seconds, 60 seconds or 120 seconds commercial or a long-lasting infomercial.
Some manufacturers use TV as primary medium. First, it should be decided whether we shall tap the regional TV to buy spots or national network which is received all over the nation simultaneously. It is also to be seen whether considering our exports, is it possible for us to advertise on satellite TV (ST)?
There are teleshopping networks like Asian Sky shop or TSN which can be approached to sell our product on TV. The three biggest expenses of the retailer are rent, sales help and advertising. When we use TV as a primary medium, we intend to slash these three expenses.
TV is a low cost distribution system. There is no need to have thousands of stores. There i no need to block money in inventories. In home shopping, there is advertising and selling all at once. TV is used by home shoppers as a noisy electronic catalogue.
Example # 6. Internet:
It allows direct marketers to talk to the customers on one-to-one basis. A direct mailer to 10,000 people could cost a company Rs.10 lakh and three weeks to design, print and deliver. But on the net, it hardly costs anything and it is delivered on the same day. Spam is a problem on the Internet.
But it does not mean mailers over the internet do not work. It all depends on how well you use your database. We must have a qualified e-mail database to yield a good response.
Example # 7. Retailing’s New Frontier:
i. Home shopping – The original concept. They sell products on TV. You have to phone in to buy them.
ii. Infomercials – These are programme length ads. They are used to sell gym equipment and cookware. Many more retailers may exploit them.
1. Give an exclusive and special feeling to the products.
2. Since mailing / shipping costs are paid by the viewers, they prefer bargain prices.
3. Large sizes should be available, as many home-shoppers are women who need such sizes.
4. Describe the scenarios in which viewers can use the products, e.g., rainy season outings, etc.
5. Sell those products that can be specified precisely, e.g., cameras, vacuum cleaners.
6. Get celebrity endorsement for trivia to glamourize them.
7. Develop rapport with the viewers.
Format of the Direct Response (DR) TV Commercial:
1. In the initial five seconds, we should have talked about the offer in terms of what is in it for the customer.
2. To sustain his interest in viewing further, the use of the product is demonstrated or the product is dramatized. We have to involve the product. It is no use if the product remains static on the table-top.
3. Every second counts. There are 60 or 90 or 120 seconds. We have to use the time effectively. We have to do hard sell, use some visual techniques. If there is no order form, repeat the offer. We have to spend at least 20 seconds on the offer and the phone number in 60 seconds commercial. The raison d’etre for running the commercial is to get response, and this time is used for this purpose.
Distinction between Brand Advertising and Direct Response TV Advertising (DRTV):
Brand advertising is done during prime-time slots. No one responds to a phone number during their favourite programme. DRTV, therefore, works better at coffee time in the morning and during afternoons. Brand advertising chases high TRP programmes. DRTV follows cheaper, off-peak slots, even in the middle of the night.
Just generating enquiries is not enough. It is the number of callers who end up buying the product which is important. Tracking sales enquiries is a daunting task.
The phone number should be shown as long as possible. There should be voice-over (VO) support. Toll-free numbers increase the number of calls, but also increase the number of wasters.
There should be creative call handling, e.g., interactive voice response systems which are computerized.
Example # 8. Radio:
Radio has not died despite the onslaught of TV and other media. It is a cost-effective media. It allows the buying of time on local stations or on national network. FM radio can prove a good medium for direct marketers.
In future, internet will be increasingly used. It is more cost-effective, targeted and measurable than traditional mass market media.
What is Direct Marketing – Challenges: List or Targeting, Offer, Timing, Ease of Response, Creativity and Media Employed
Many marketers recognize the financial benefits of increasing targeted awareness. On the other hand some direct marketing efforts using particular media have been criticized. This has posed a problem for marketers and consumers alike, as advertisers do not wish to waste money on communicating with consumers not interested in their products.
Success of any Direct Marketing campaign depends on the parameter of desired response.
It may be best or worst on the following basis:
i. List or targeting – Identification of the real targets is a difficult task.
ii. Offer – What is to be offered to the target is an important decision.
iii. Timing – At what time the target is to be approached?
iv. Ease of response – The ability of getting the right response is of paramount important.
v. Creativity – The practice of old wine in new bottle wont workout with direct marketing.
vi. Media employed – The nature of media employed influences a lot on the returns.
Consumers have expressed concerns about the privacy and environmental implications of direct marketing. In response to consumer demand and increasing business pressure to increase the effectiveness of reaching the right customer with direct marketing, companies specialize in targeted direct advertising to great effect, reducing waste of advertising budget and increasing the effectiveness of delivering a marketing message with better geo- demography information, delivering the advertising message to only the customers interested in the product, service, or event on offer.
What is Direct Marketing – Advantages and Disadvantages of Direct Marketing
Advantages of Direct Marketing:
Direct marketing provides a unique range of benefits because it enables an enterprise to engage directly its audience – whether they are prospects, leads, end users or existing customers.
The following are the unique advantages of direct marketing:
i. Flexible Targeting:
Direct marketing enables an enterprise directly identify, isolate and communicate with well-defined target markets.
ii. Multiple Uses:
Direct marketing is used not only to increase the sell but also to test new markets and trial new products or customers, to reward existing customers to build loyalty, collect information for future campaigns.
iii. Cost-Effectiveness:
The cost per acquisition of direct mail can be significantly less than other marketing methods.
iv. Ease of Management:
Direct marketing provides greater control and accountability than other marketing methods. It is easy to measure results under direct marketing campaigns. It enables the enterprise to plan effectives for future growth.
v. Rapid Delivery:
Direct marketing is both swift and flexible in achieving results. This is especially true for telemarketing, one of the direct marketing tools, as the results of a conversation can be logged immediately and scripts adjusted straight away to improve results.
vi. Testing Capability:
Direct marketing allows an enterprise to test and ensure the most viable direct marketing tool.
vii. Relationship Building:
Direct marketing is far more effective at initiating and developing a meaningful dialogue with new customers.
viii. Targeting of Messages:
Direct marketing can enable an enterprise to target different messages to different recipients.
ix. Geographic Targeting:
Direct marketing can be used for any level of geographic targeting, whether it’s the local area surrounding a shop or restaurant, regional targeting by postcode or county, national targeting and even international targeting. Direct marketing can prove a far cheaper way of testing the market than a costly personal sales visit.
Disadvantages of Direct Marketing:
Despite all these advantages there are a number of problems associated with direct marketing.
They are:
i. May be seen as competing with existing intermediaries – May upset marketing intermediaries as sales through direct marketing may be taking sales away from them. In effect, you may end up competing with your customers, that is, the intermediaries.
ii. May be seen as intrusive by consumers – Especially a problem for door to door and tele-marketing direct marketing techniques.
iii. Costs – Initial customer acquisition costs are high — high cost per thousand reached; and database development can be expensive.