1direct marketing

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INTRODUCTION

Dominos Pizza entered the Indian market only post 1996. But in less than

five years they have been able to redefine the paradigms in food business and

service sector.

The success of Dominos is attributed to:

a) Clearly defined and communicated service delivery standards.

b) Effective implementation of direct marketing strategy.

c) Customer relationship management (CRM) practices.

d) Empowering the customer so that he/she could create his/her own product.

Dominos as mentioned earlier, have used the direct marketing strategy to reach

out to customers. Their advertisements initially showed the telephone numbers of

their different outlets and promised to deliver hot fresh pizzas at customers

doorstep in 30 minutes. Subsequently, once MTNL and BSNL came up with the

toll free number

1-600, the company only advertised this number for order placement. This

number was named by Dominos as the Hunger Help Line. On receipt of the

call, the order was transferred in a seamless manner to the outlet nearest to the

caller, who then produced and delivered it to the customer within the stipulated

30 minutes. It also tied up with mobile phone companies for a similar service for

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customers. The menu card too was delivered along with the order, so as to keep

the customer informed of Dominos different offerings and their prices. This also

ensured that Dominos was within easy reach of the customer, right at home.

Like Dominos today there are several food chains, consumer product companies

and service organizations that are using the direct marketing strategy for

effectively reaching out to their customers. Direct Marketing is gaining

importance, especially in urban markets and has emerged as an alternative form

of marketing. Brands like Orange cellular phone services have been built through

an effective use of direct marketing tools.

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INTRODUCTION ABOUT DIRECT MARKETING

If a person is a Citibank, Visa or Master card holder, living in a metro or

class one town, by now he would probably be accustomed to receive some

unexpected mail inviting him to a launch function of a new product, a live

demonstration of a gadget, an exhibition of designer jewellery or a music concert

sponsored by some business firm. He may also get some promotional literature

about an investment scheme or some share application forms for public issues of

companies, or be offered a hefty discount on subscription of a magazine or an

early bird incentive on booking a residential flat.

Even in the class two and smaller towns, people are getting surprise gifts

and greeting cards on occasions like anniversaries, birthdays and the new year.

This is an indication that direct market is catching up in the post-liberalization ere

in India. Several firms, otherwise marketing their products through conventional

channels, are now also using the direct approach to communicate with and retain

their customers. Different firms use different methods to zero in on the prospects

included in their hit lists.

Direct marketing as a concept has evolved to its present-day form through

various stages of transformation. Originally a form of marketing in which goods

moved from producer to consumers without involving middleman, firms selling

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directly to the end users through their own retail outlets and / or salespersons

were said to be involved in direct marketing. With the development of other form

of personal communication, such as the telephone, direct marketing was

redefined.

According to the Direct Marketing Association of the USA (as quoted

in Kotler 1991), Direct Marketing is an international system of marketing

which uses one or more advertising media to effect a measurable response

and/ or transaction at any location.

Direct Marketing thus includes any activity whereby firms reach the

customer directly as an individual, who responds to them directly. It differs from

conventional marketing in the sense that it talks directly to the prospect on a one-

to-one basis without involving any intermediary. Direct Marketing programs are

usually designed to achieve a measurable result in a relatively short duration of

time. These differ from other promotional activities, though they may use the

same media or sometimes the same techniques, such as coupons and samples.

In the absence of conceptual clarity, direct marketing is often defined very

narrowly as a synonym of some simple specific function such as direct selling,

mail-order selling or direct distribution. In fact, it is much more than all these. A

complete system of integrated functions aimed at satisfying customer needs

more effectively, it is by no means a short-term quick buck affair.

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In conventional marketing, firms wait for the customer to walk into their

stores, whereas in direct mode firms prefer to go out ad get the customer before

he steps out of his home. It is a very focused activity that follows a firm to

concentrate on a chosen segment of customers and interacts with them more

effectively through different media. Being a more precise and goal-oriented

activity it is more suitable for firms operating in specific niche markets.

According to the number one direct-selling firm in the world, Amway

corporation of the USA (estimated sales for 1995US$6.3billion), Direct selling

moves products from the manufacturer/supplier to the seller and consumer

without intermediaries. It differs from direct marketing in the sense that direct

marketing companies depend more on mailing, catalogue sales, direct response

and coupon sales, telephone and telemarketing and the like; and now they are

also selling via computer networks such as the Internet. In contrast, direct selling

is always performed through the salesperson.(As quoted at the CII-Amway

Seminar1996).

In direct marketing goods move from

Manufacturer Consumer

In direct selling goods move from

Manufacturer Distributor Consumer

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Some newer forms of direct selling such as multiplayer marketing (MLM)

may involve different layers of distributors and salespersons selling to the

customers directly. Amways definition notwithstanding, direct selling as a

concept is nothing more than a mode of direct distribution.

The early practitioners of direct marketing in India include Readers Digest

magazine, Bullworker exerciser, and some regional language publications that

used mail coupons to increase circulation. Of late, catalogue-shopping firms such

as Burlingtons have also made forays into the Indian market, but achieved only

limited success. However, in the late1980s, it was the success of Eureka Forbes

vacuum cleaners and Real Value Appliances Cease Fire brand of fire

extinguishers (will you call it direct marketing or direct selling?) that signaled the

dawn of direct marketing in India.

At the professional level, the credit of pioneering direct marketing in India

goes to the media person Ram Nathan Sridhar who founded O&M Direct in 1987,

exclusively to handle and promote direct-marketing activities in a professional

manner. Since then, he has been selling the idea of direct marketing to savvy

marketers with missionary zeal and spirit.

Today, all major advertising agencies in the country such as Hindustan

Thompson Associates (HTA), Lintas, Mudra, Trikaya Grey, Response, Contract

and many others have set up separate divisions to cope with the growing

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demand for direct marketing. Presently, direct marketing accounts for only about

14 percent of the Rs 45,000 million Indian ad spend, but going by the current

trend of 35 percent annual increment in expenditure on direct marketing, it is

going to be a big business in the next couple of years.

The Direct Marketing Association (DMA) defines direct marketing as follows:

Direct marketing is an interactive marketing system that uses one or more

advertising media to affect a measurable response and /or transaction at

any location.

This definition emphasizes a measurable response; typically a customer

order. Thus direct marketing is sometimes called direct-order marketing.

Today, many direct marketers see direct marketing as playing a broader role,

that of building a long-term relationship with the customer (direct relationship

marketing). Direct marketers occasionally send birthday cards, information

materials, or small premiums to select members in their customer base. Airlines,

hotels, and other businesses build strong customer relationships through

frequency award programs and club programs.

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WHAT IS DIRECT MARKETING

Direct Marketing is an interactive mode of marketing through which the marketer

reaches out to his target market at any location. . An analysis of this definition

brings out three key elements, namely:

1) It is an interactive system in the sense that there is a two-way communication

between the marketer and his/her target market; the response or non response

of the customer completes the communication loop in the direct marketing

programme. For example, when the customer fills in the response coupon in an

advertisement or a catalogue and mails it, he/she communicates to the marketer

and hence completes the communication loop.

2) Another element is measurability of response. As mentioned above the number

of coupons received indicates the response rate to the marketers

communication.

3) Direct marketing activities are not location specific; it is not necessary for the

customer to physically interact with the marketer, he/she can establish a

contact through mail, phone, fax, or the internet.

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As mentioned above, direct marketing is an efficient way to promote and sell products

and services in a highly competitive market. The goal of direct marketing is always a

response

from the customer. Direct marketing has also been known by other terms like

direct selling, mail order selling or catalogue selling.

Today direct marketing uses all these tools and is based on a customer

database. In fact the key to successful direct marketing is the development of this

database.

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WHY DIRECT MARKETING

The growth of direct marketing in India can be attributed to environmental

complexities and the concept of bargaining power. Customer life styles have

changed especially in metros and large cities. Todays customer looks for

convenience in shopping and getting the product or service delivered in the

comfort of his/her house. Teleshopping, home shopping channels, catalogue

marketing and online shopping are some of the tools that enable companies to

cater to this core customer value.

Globalization of markets and the internet direct marketing. Today a firm

have further facilitated the growth of need not have operations in all its markets

but can still cater to the world demand. Dell computers and Amazon are two

leading examples of successful direct marketing around the world.

Today the cost of a retail shelf at outlets in major cities is prohibitive.

Fragmentation of media and audiences also imply higher advertising budgets.

With customer loyalty on the wane and the costs of marketing increasing, firms

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margins have come under pressure. Productivity of marketing resources is now

as much of a concern as that of any other resource. Direct marketing helps

HOW DIRECT MARKETING WORKS

Direct marketing, as practiced by professionally managed firms is a four-step

process:

1. Identifying prospects

2. Establishing contact

3. Booking the order

4. Maintaining contacts to develop a mutually beneficial, long-term business

relationship.

Identifying prospects and segmenting them into various categories based

on certain specific criteria is critical to the success of direct marketing. This is

done in different phases. In the first phase, a preliminary list of potential or may

be customers is made through random mailing, house calls, or mass media

advertisements using coupons or some other contact device. In marketing

parlance it is termed cold listing.

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This cold list is thoroughly scrutinized and attempts are made to identify

those who are not likely to use the proposed product or service due to

incompatibility of need, income, age, sex, occupation or any other reason. All

such people who dont qualify as prospects are dropped from the list. The

residual list is then known as the hot list. Firms may sometimes seek to gather

additional information about those included in the initial list by contacting them on

telephone or through other convenient media.

The next step is to draw a detailed profile of the prospect. This may

include information on consumption habits, purchase behavior, personality and

lifestyle, social class, exposure to media; and demographic particulars such as

age, income, education, profession, family size, domicile and complete postal

address. Technically this step is known as profiling the respondent or response

graphic.

The list is further split into separate clusters of identical groups, using

some demographic, psycho graphic, or behavioral parameters. This exercise is

termed segmentation. Firms now adopt many innovative ways of clustering,

using novel parameters such as traveling habits, food preferences, ownership of

automobiles, possession of assets and durables, and taste for music and art.

Finally, each cluster is researched using some predetermined criteria, to

identify the specific segment or segments to be targeted for marketing the

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product. This exercise is known as targeting. If the product is a high-value item

such as jewellery, a computer or an expensive gadget, direct marketing goes into

further details and makes an elaborate study of each individual included in the

target segment. This is known as individualization. Now the firm may focus on

the specific needs of the individual customer. Let us now see how it works in

actual practice.

Having identified the customer and prepared a database of individual

profiles, the next step is to call at the residence of individual prospects for live

demonstration or to offer a free sample of the product. Since the individualistic

approach ensures better chances of being heard, it is far less difficult to get an

order for the product. In the afore-said example, the firm was successful not only

in selling its gadget to a majority of the host-listed respondents, but in the future

too, this database may be of immense help in identifying and targeting customers

if it introduces some related product such as a blood sugar or body weight

monitor, or a self testing kit for diabetic patients.

Finally, having been able to sell the product or service to a customer., it is

essential to keep in touch with him/her through mail, telephone or any other

means of communication, to retain him / her as a customer. To create a lasting

relationship, firms must maintain regular contact and update their data according

to the changing needs and tastes of the customers.

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DIRECT MARKETING MIX

The marketing mix in direct marketing mode, by and large, remains the

same except for the communication programme and customer service, which

have acquired new meaning. For example, if the marketer guarantees delivery of

the product within a defined time frame, also promises to take it back in case it

fails to live upto customer expectations and return his/her money, then the

customer service executive cannot refuse a claim. This is opposed to general

marketing where the marketing can put several disclaimers and may refuse the

customer. In direct marketing, refusal to accept customer claim without any

question may cost the marketer significant losses as he not only loses that

customer but subsequent prospects as well. In general marketing, the loss can

be contained through other elements of the marketing mix. In addition to

marketing mix decisions, the direct marketer has to pay special attention to the

following factors in decision making:

1) Communication Programme:

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This involves both creative and media decisions. The creative decisions

center around the copy platform, graphic design elements, mailers, stickers and

so forth.

The media used by direct marketers are mailers, telephone, television and the

internet. Direct response print and television advertising are particularly effective

in generating response to the offer, especially if it is complex to understand. Also,

the direct marketer today uses various outdoor, retail panels( Just Talk and BPL

MOTS brands of prepaid Sim cards in Mumbai) and even stickers to retain the

brand at the top of customers mind. These also serve the purpose of a reminder.

2) Customer Service:

Customer service is a key input in direct marketing. In a direct marketing,

physical contact with the customer is low, and it is the quality of service that

facilitates customer decision making. Service, therefore, is an investment and

cannot be ignored. The customer service mix today involves speed and accuracy

of order fulfillment, immediate customer complaint resolution, etc.

3) Timing and Sequencing:

This factor involves determination of whether the product or service is offered

once, as a part of the campaign or continuously. This will obviously involve

campaign decisions like whether to have bursts, pulsing or a continuous

campaign.

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DATABASE DEVELOPMENT

Database marketing is the most effective way to customize the marketing mix

to suit target markets. This helps not only in customizing the offering but also its

delivery. Database marketing is an interactive approach to marketing that uses

all communication tools and media vehicles to reach to the target market. It is

also the basis of all relationship marketing efforts of the company. The

information stored in the database is used to develop customer loyalty and to

identify all potential buyers for any new product or service. It also helps in

identifying the most cost effective media and delivery vehicles.

Characteristics of a Good Database:

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1) Each customer or prospect should be treated an individual entity and hence a

separate record for him/her should exist in the marketing database. Market

segments are an agglomeration of such individual customers.

2) Each such marketing record should contain all the relevant information and access

details like name, address, telephone numbers, frequency of product use,

experience with the product, industry and decision making units for

organizational customer.

3) This information should be available to all departments and employees of the

company involved in the direct marketing programme so as to enable them to

be customer friendly.

4) The aim of the organization should be to replace routine usage surveys with this

database.

5) Information technology tools should be used to strengthen this database and also

develop corporate responses to the customer. These tools can also be used to

identify opportunities and threats in the customer environment and craft

appropriate responses which will help the marketer to exploit opportunities and

neutralize threats. The use id these tools should also help in optimum resource

utilization.

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The Strengths of Database Marketing are:

1) Measurability:

Unlike conventional marketing, direct marketing response can be measured.

This helps firms redefine their marketing programme if required and also to

customize it to segment needs.

2) Testable:Effectiveness of different elements of a marketing programme can be tested.

3) Customisation:

The database provides the firm with an opportunity to customize its

communication with the target market.

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THE BENEITS OF DIRECT MARKETING

Direct marketing benefits customers in many ways. Home shopping is fun,

convenient, and hassle-free. It saves time and introduces consumers to a larger

selection of merchandise. They can do comparative shopping by browsing

through mail catalogs and on-line shopping services. They can order goods for

themselves or others. Business customer also benefits by learning about

available products and services without trying up time in meeting sales people.

Sellers also benefit. Direct marketers can buy a mailing list containing the

names of almost any group: left-handed people, overweight people, and

millionaires. They can personalize and customize their messages. According to

Pierre Passavant: We will store hundredsof messages in memory. We will

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select ten thousand families with twelve or twenty or fifty specific characteristics

and send them very individualized laser-printed letters. Direct marketers can

build a continuous relationship with each customer. The parents of the newborn

baby will receive periodic mailings describing new clothes, toys, and other goods

as the child grows. Nestls baby food division continuously builds a database of

new mothers and mails six personalized packages of gifts and advice at key

stages in the babys life.

Direct marketing can be timed to reach prospects at the right moment, and

direct marketing material receives higher readership because it is sent to more

interested prospects. Direct marketing permits the testing of alternative media

and messages in search of the most cost-effective approach. Direct marketing

also makes the direct marketers offer strategy less visible to competitors, finally,

direct marketers can measure responses to their campaigns to decide which

have been the most profitable.

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FACTORS CONTRIBUTING TO THE GROWTH OF DIRECT

MARKETING IN INDIA

In the international market direct marketing has evolved through the

catalogue route. It was the catalogue marketer of the 1930s who set the pace,

but it took direct marketing several decades to reach its present-day multimedia,

interactive modes status. In India, direct marketing was launched on the mail-

order platform in the 1950s.but the growth in the earlier days was sluggish and

the practice was confined to only a product categories. Most major developments

in this area took place only after the consumer boom in the mid 1980s.

Direct marketing in India has since grown by leaps and bounds. With the

advent of competition in the 1990s, several firms such as Philips, Telco, Titan

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and BPL who were earlier marketing their product through conventional channels

only are now turning to direct marketing to strengthen their marketing efforts and

increase their consumer base. They are integrating direct marketing with

conventional distribution to get closer to their customer.

The following major factors have contributed to the quick growth of direct

marketing in India:

Successful replication of overseas products and marketing practices

in India.

Eureka Forbes made history of sorts in India by successfully marketing

vacuum cleaners through door-to door selling. The firm had, in fact not done

anything new. It had only been replicating here the strategy, which was earlier

used in the European markets quite successfully. Nevertheless, its success in

India provided a role model for other firms to emulate.

Change in the Indian business environment due to liberalization

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Some major changes in the Indian business environment, especially after

1991, made the domestic markets for many consumer and industrial products

more competitive. For the first time, several business firms that were well

entrenched in their markets felt the heat of competition. It was now essential for

them to get closer to the customers to protect their markets. Many of them, such

as Onida, HMV, BPL and Titan who were selling their products only through

agents and middlemen, switched to a parallel channel of direct marketing by

opening several exclusive retail shops. The aim was to keep in direct touch with

the customers and provide certain services that were not being provided by the

middlemen.

Another objective of opening exclusive showrooms was to build an up-

market image of the company by demonstrating the full range of products. The

ambience and dcor of the exclusive showrooms also helped these firms in

adding value to their brands. LML Vespa, Liberty shoes, Bausch& Lomb eye care

products and several others ventured into direct retailing probably due to this

reason alone. Service firms such as ITC Hotels and ANZ Grindlays Bank found

direct marketing very effective in retailing customers and weathering competition.

Middlemen getting stronger.

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Several firms such as those in the publishing business, are now

increasingly opting for direct marketing to reduce their costs of distribution. Over

the years, middlemen in India have become very strong and demanding. In

pharmaceuticals, IMFL (Indian made foreign liquor), packaged food and several

other industries, the market is in fact controlled by middlemen, who dictate terms

to manufacturers. In the FMCG category any new firm wanting to enter the

market is virtually at the mercy of middleman. Because of higher mark-ups the

cost of distribution for products like soft drinks, confectionery, ice-cream and

frozen goods has gone up to the extent that in some cases it is even higher than

the cost of production. If the trend continues, it may prompt many more firms to

check the direct marketing alternative.

Another reason for the spurt in direct marketing activities is that dealers

usually push brands selectively, depending upon their equation with the

manufacturers. Therefore to protect their brands from discrimination and to get

direct aces to the market, more and more firms are now opening their exclusive

showrooms, especially in large cities and towns.

Advent of cable television.

Proliferation of satellite television channels and the resultant rise in cable

TV connections in urban and semi-urban India has offered an excellent

opportunity for marketing firms to exploit this new high-tech medium for direct

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communication. Teleshopping firms such as Dee's Teleshopping, Teleshopping

Networks (TSN) and Asian Sky Shop (ASS) are now marketing jewellery, toys,

cosmetics, watches, leisure products, domestic gadgets, car finance and many

more products and services through their small screen.

The USP of Teleshopping is the convenience of shopping from home and

getting the goods delivered at ones doorstep. The selection of products to be

marketed through Teleshopping, therefore, depends largely on the target

audience and the timing of the programme. As this medium of retailing is

relatively new to Indian firms, companies are mostly concentrating on unique

household items and targeting up-market housewives.

Large database maintained on computers

Computers have provided the real boost to direct marketing by facilitating

maintenance of large database on consumers. With the enormous computing

power at their command, firms can now store update and use large quantities of

data for profiling and individualizing their customers. Computer based analytical

techniques such as non-parametric multidimensional scaling and perceptual

mapping have helped firms in segmenting their markets and targeting their

customers.

Taking advantage of computing power, firms like Johnson & Johnson, for

example have created a database of more than 10,000 mothers in Mumbai, each

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with a baby less than two years old. They have collected this data from hospitals

and maternity homes. Nestle have carried out similar exercises in other metros

for its Cerelac brand infant food. ITC Welcome Group Ltd has complied a

detailed database on all CEOs and senior managers in the country. This included

details about each individuals travel pattern, destination frequently visited, and

choice of food and accommodation. Telco is reported to have put together an

immense database on 145000 bus and truck owners around the country.

In fact, database-directed marketing has become a potent weapon for

acquiring a competitive edge in products and services where differentiation

between brands is difficult. A bold, powerful and direct personal communication

that adds value to the product and establishes a lasting relationship with the

customer is now possible due to computerization. Ability to file, amend and

retrieve data has changed the procedures, prospects and profitability of direct

marketing.

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FUTURE OF DIRECT MARKETING IN INDIA

The future of Direct Marketing in India is dependent on the following:

1) Reaching out to non-metro/non-urban market:

As metro and urban markets get saturated by products and services

promoted in both general and direct marketing models, the key to any direct

marketing campaign lies in expanding its reach to rural and semi rural markets.

Infrastructural constraints have so far come in the way of the direct marketer. But

with rural cyber cafes, satellite television reaching rural areas, telecom booths

and mobile telephony now gaining popularity, it should be possible for the

marketers to reach out to their target market in these areas. Indian post offices

are located in the farthest corner India and services villages with a population as

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low as 20 households. These offices can be used as an effective medium to

communicate, deliver and even service the rural consumer. IDBI, ICICI, SBI and

other financial institutions are today directly marketing their mutual funds and

financial products through the Indian post offices. Thus, the key to success in the

Indian market lies in the firms ability to access rural markets.

2) Enhancing credibility of the offer:

The Indian customer generally does not buy the product or service until

he/she has seen it, touched it and experienced it. Therefore these are key

ingredients in the customer selection process and the direct marketer has to

enhance his credibility as he cannot offer these benefits. Therefore, he needs to

pay special attention to ensuring that the customers experience with the product

exceeds his/her expectations. Also he needs to focus on service to endure

speedy settlement of any claims. Credibility is the key to success in direct

marketing.

3) Wider use of debit and credit card:

Direct Marketings success in India will be dependent on the wider

use of debit and credit card as mode of payment by both the customer and the

marketer. This involves a shift of transactions from cash to non cash modes

and hence a change in the customers and the sellers mindset.

4) Emergence of specialized database firms:

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Another key factor in the success of direct marketing is the evolution

of specialized Database firms. It is expensive proposition both in terms of money

and time to create a customer database. This makes direct marketing feasible

only for large firms. A very large component of Indian economy consists of the

small and medium sized firms who cannot afford to create this database. Hence

emergence and evolution of firms specialized in database management will

contribute to the success of direct marketing in India.

ANALYSIS OF CASES, WHICH SHOWS THE WORKING OF

DIRECT MARKETING.

CASE STUDY 1

Direct marketing of a blood pressure instrument

An electronic gadgets manufacturing firm wanted to market in India a

small, hand-held electronic instrument for measuring blood pressure at home.

The price of the instrument was fixed at around Rs. 3000 a piece. Being a

specialty product, it was perceived to have only a limited clientele. As the firm

had no establishment channel of distribution, it decided to take the direct-

marketing route. The product was unique in the sense that it offered the

convenience of constant monitoring of blood pressures at home, in office or

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anywhere, without having to visit the doctor. It could save a lot of time and

inconvenience, especially for busy professional, executives, businessmen and all

those who had a hectic work schedule. Since it was a relatively expensive

product, senior executive, professional and businessmen over 45 years of age,

having an income of more than Rs 15000 per month were expected to be the

prospective buyers. The firm adopted the following procedure for identifying and

enlisting prospects.

In order to prepare a cold list, an advertisement of the product, along with

a coupon, was released in two leading newspapers in Mumbai. Interested

individuals were asked to fill up the printed coupon, and send it to the firm within

10 days to get a free booklet on management of blood pressure. Personal

particulars relevant to identifying the qualifying prospects such as income, age,

profession, residential address and details of any health-related problem were to

be filled in the coupon.

A majority of people who responded were found to be suffering from blood

pressure, obesity or heart-related problems. A cold list of about 5000 individuals

was generated on the basis of filled-in coupons. This list was further scrutinized

and names of apparently non-serious responding who might have sent the

coupons more out of curiosity. The residual list of about 3500 respondents was

treated as the hot list.

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Another alternative to this newspaper ad approach, as suggested by the

research agency was to obtain a list of credit card holders from reputed banks

such as ANZ Grindlays, Citibank, Canara bank, State bank of India and Bank of

Baroda. The firm could then have sort out the names of cardholders who were

above the age of 40 and occupied senior executive positions in private or public

organizations. This would have formed the cold list. Next, the firms could have

sent a brochure and a personal letter to them offering to arrange a free

demonstration would have formed the hot list. However, this approach was not

taken due to some logistic problems.

The respondents were then clustered into different segments on the basis of their

health status: those who had only mild blood pressure but no other problem;

those suffering from obesity and blood pressure both; those suffering from blood

pressure and some cardiac problems; those who had blood pressure and

diabetes with or without some cardiac problem; and so on. This database of all

the listed people with their detailed profiles helped the firm in identifying specific

needs of the respondents.

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Case study 2

Dial-a-computer

In1994, around one million corporate and individual users in America

purchased computers by placing their orders on telephone. The two direct

marketing firms who have benefited most from this trend are Dell Computer

Corporation and Gateway 2000 Incorporated. Due to their long experience and

established reputation in direct marketing, both have together cornered around

15-20 per cent of the US$ 45 billion PC business in the USA.

In the 1980s, Apple, Compaq and IBM created quite a flutter in the market

when they decided to sell their PCs directly in phone. Most observers believed

that customers would flock to the big brands and smaller guys like Dell and

Gateway would soon be run over by the biggies. But somehow, it happened the

other way round. Due to their lack of experience in direct marketing, the big

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brothers were unable to manage the new mode of retailing properly and

gradually pulled out of the sticky direct marketing business.

This now leaves Dell and Gateway with a 47 percent combined share of

the total mail order PC business in the USA. Many market analysts estimate their

combined share to be70-80 percent by 1998. This amply demonstrates that no

firm can win the marketing game solely on the strength of its products image.

The total marketing strategy matters most.

It is also interesting to note that Dell and Gateway both made their debut

in the computer business at lower end of the market. They started with taking

orders on telephone and delivering the values for money hone PCs directly at

customers door. But the scenario has now changed and mail order is a preferred

mode of shopping for the best quality products. Dells average customers spend

around US$2,700 as compared to US$ 2,400 spent by Compaqs customers.

Direct marketers assemble components into custom-configurated computers as

and when phone calls come in, and therefore carry far as the 10 percent dealer

margin does not have to be paid. As a result, when the PC market in the USA is

growing at 15 percent per annum, these two firms are targeting a growth rate of

35-40 percent. Meanwhile, Gateway has also opener showrooms in Paris and

Frankfurt to acquaint the European shoppers with their product range. But both

remain committed to marketing directly.

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PRODUCTS MORE SUITABLE FOR DIRECT MARKETING

Industrial goods are traditionally sold through the companys own sales

force. In case of high-value Industrial products, such as machines, equipments,

high-tech engineering goods, and projects where long-term standing in the

market and one-to-one relationship with the customers are both important, direct

marketing may produce better results as compared to other approach. Madras

based medium sized engineering firm, RKKR Steels has demonstrated that even

construction grade steel products (such as bars, angles and frames) can be

marketed directly to builders, contractors and individual buyers.

Services come next in the list of favorites for direct marketing. In service

oriented business, retaining the customers and getting repeat business is critical

for the success of any venture. Perhaps because of this an ever-increasing

number of foreign and private sector banks, hotels, airlines, corporate hospitals,

health clubs and couriers firms are now banking more on direct marketing.

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Individual approach, as used in direct marketing helps in creating customer

loyalty, the backbone of service organization. In India, firms like ANZ Grindlays

bank, DHL Worldwide, ITC Hotels, NEPC Airlines and many more have benefited

immensely by direct marketing during the last couple of years.

Direct approach is also being used extensively in the marketing of financial

products such as new issues of share, fixed deposits schemes and mutual funds.

Real estates and plantation firms like Anasals properties, sterling Holiday

resorts, Anubhav Plantation, teak Equity and many more have been making the

most of direct marketing. Nevertheless, direct marketing is Viable only if the

margins in the business are high enough to absorb the cost of maintaining

regular contract with customers; otherwise it may turn out to be a losing

proposition.

The next category of products suitable fro direct marketing is high value,

high involvement consumer products such as expensive cars, jewellery, designer

watcher and furniture, some specialty products that have a small customer base,

such as medical equipment, health care products and special application gadgets

may also be marketed by making direct contract with prospects.

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High-value, low volume niche marketing items such as Single malt whisky,

ray-ban sunglasses, Bausurch & Lomb eye care products and premium blends of

tea (e.g., editors Choice) are ideally suited for direct marketing. Many such

products like exercisers, executive diaries, new compact music disks; car

accessories, new kitchen appliances and expensive perfumes are normally not

available at retail stores. Because of their novelty value, these may evoke better

respons3e if marketed directly to the consumers.

Amway Corporations list of items more suitable for direct selling includes

cosmetics, vitamins, books, cutlery, domestic electronic goods, air and water

filters, clothing, food and wine, Kitchen appliances, Kitchenware, cleaning

products, toys and crafts, hobby items, hand tools, automobile accessories, as

well as an endless variety of catalogue items either unique to the company or

sourced from third parties.

Direct marketing is also effective where the firm has a family of products to

offer to the same person or household. It is far more economical and makes

better business sense to sell to the known customers rather than finding a new

customer every time. Some publication groups such as Living media and

Spectrum Communication, who offers a variety of publications for different tastes,

have taken this route successfully. Eureka Forbes benefited immensely from

their database about the vacuum cleaner buyers, when they introduced another

novelty product(water purifier) in the market.

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With the advent of multinational brands in the Indian market, direct

marketing may also penetrate into lifestyle products categories such as fashion

garments, perfumes, shoes, wristwatches and toiletries. ITC has already shown

the way by opening exclusive showrooms in a few select metros for its Classic

brand premium cigarettes and golf accessories.

STRATEGIES FOR DIRECT MARKETING

Strategies for direct marketing a product or service to the target customer

would normally encompass the following equally importance elements:

Planning the product offer

Pricing policy

Media strategy

Distributing

Evolving the basic strategy for direct marketing requires a careful study of

the market and the product, and logical planning.

Planning the product offer

A product offered through direct marketing may be one of the three types.

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A product specifically developed for direct marketing

A product designed and priced exclusively for direct marketing is not

available in retail shops or through any other outlet. Its designing, packaging,

pricing and positioning is normally done in a way that it may be offered with or

without some add-on attachments for free trail, and distributed directly through

post or courier. Bull work exerciser, cease fire extinguisher, editors choice tea

and many others were developed (or blended) specially for direct marketing.

Several electrical gadgets, kitchen appliance, hand tools and fashion items

marketed exclusively but tale shopping organization are still not available through

any other outlet.

A retail product adapted for direct marketing

A retail may be adapted with minor changes for use in direct marketing.

There are several ways of making such changes. Changing the packaging,

accessories, attachment and even the brand name are some of the common

techniques of adoption. A multi-part product such as different volumes of an

encyclopedia may be marketed as separate units. Dramatization of some

features of product to make it look like different offer is another way of adapting a

retail product for direct marketing. For instance it is a no-frills, basic products, the

firm may stress on simplicity, user-friendliness and responsible price. On the

contrary, if the product is complicated and difficult to operate, you may stress on

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advance technology. Nash(1986) termed this strategy as turning lemons into

lemonade.

Another method of adapation involves repositioning the product on some

different attributes or usage patterns so that it looks like a different product. Nash

(1986) calls it changing the product without changing it. Anyone who doesnt

believe this may have a hard look at some of the products currently being offered

through mail order and telescoping.

A retail product marketed without any modification through both

conventional as well as direct channels.

It is always possible for a firm to use direct marketing as an additional

channel to market its products, without making any change or modification in the

retail version of the products. Most magazines, music CDs, encyclopedia,

premium whiskeys, exercising equipment, computers, etc., are usually marketed

through direct as well as conventional channels in identical forms and formats.

In the US markets, many computer firms are hawking their hardware with

identical configurations by using the conventional as well as direct route. This

was explained in the previous case study.

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Pricing strategy

In direct marketing, price is often used to spearhead the overall marketing

strategy of the firm. Not only the price but the way it is expressed is also very

important. It may be quoted in several ways: as net price excluding all

accessories, freight and forwarding costs and taxes or as a package-deal price

including all of these; or with some additional offers such as free gifts, guarantee

or credit offers. The telescope Network (TSN), for example, offered BPL

microwave oven to buyers in Bombay and Madras at the same price as in the

market, with free gifts of Borosil bowls.

A new product maybe launched with a special introductory offer, or at a

low invitation price or special subscription price, or with an opportunity to

participate in some contest or sweepstake. Pricing strategy for direct, marketing

thus has to be flexible and adaptable to different situations.

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Media strategy

Media strategy for direct marketing may incorporate a logical testing plan

with some calculated risk, to exploit a productive campaign as quickly as

possible. The media commonly available to direct marketers are direct mail,

press coupons, telephone, cable TV, and television and computer networks.

Each of these has its own merits and demerits. Press Coupon is gaining

popularity because it is economical and gives quick feedback. The advantage of

direct mail lies in its highly individualized communication. The activities of the firm

therefore remains unnoticed by the competitors for a long time. Due to this

unique benefit, many new products in the West are launched through direct mail.

Direct markets may use different media depending on the nature of the

product and the target audience. Mumbai-based Burlingtons, for instance are

currently using mail order catalogue; Music Today is using direct mail; Shie

perfume and Dollop ice-cream use the telephone. O & M Direct had earlier used

television to enroll volunteers for the national Literacy Mission Campaign.

In India, teleshopping is an emerging mode of direct marketing. The shape it will

acquire in future will depend more on how the current players perform. In order to

increase the visual appeal and make the communication more authentic and

believable, the display of products is important; equally important is how and by

whom. TSN has therefore selected hosts whose images go well with the products

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with the products they present. So, Priya Tendulkar (of Rajani fame) with her

quality conscious housewife image demonstrated kitchen appliances, Mandira

Bedi with all her charm hosts jewellery shows, and health products are hawked

by sports star Mickee Mehta. These carefully selected hosts add the much-

needed zing to mundane selling and buying.

MAJOR DECISIONS IN DIRECT MARKETING

In preparing a direct-marketing campaign, marketers must decide on their

objectives, targets, offer strategy, various tests, and measures of campaign

success. Here we will review these decisions.

Objectives:

The direct marketer normally aims to secure immediate purchases from

prospects. The campaign success is judged by the response rate. A response

rate of 2% is normally considered good in direct marketing sales campaign. Yet

this rate also implies that 98% of the campaign effort was wasted.

That is not necessarily the case. The direct marketing presumably had

some effect on awareness and intention to buy at a later date. Furthermore, not

all direct marketing aims to produce an immediate sale. One major use of direct

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marketing is to produce prospects leads for the sales force. Direct marketers also

send communication to strengthen brand image and company preference;

examples include banks that mail birthday greetings to their best customers.

Some direct marketers run campaign to inform and educate their customers to

prepare them for later purchases; thus Ford send out booklets on How to take

Good Care of your Car. Given the variety of direct marketing objectives, the

direct marketer needs to carefully spell out the campaign objectives.

Target customers:

Direct marketer needs to figure out the characteristics of customers and

prospects who would be most able, willing, and ready to buy. Bob stone

recommends applying the R-F-M formula ( recency, frequency, monetary

amount) for rating and selecting customers from a list. The best customers target

who bought most recently, who buy frequently and who spend the most. Points

are established for varying R-F-M levels, and each customer is scored; the

higher the score, the more attractive the customer.

Direct marketers can use segmentation criteria in targeting prospects.

Good prospects can be identifies on the basis of such variables as age, sex,

income, education, previous mail-order purchases, and so forth. Occasions also

provide a good segmentation departure points. New mothers will be in the market

for baby clothes and baby toys; college freshmen will buy computers and clothing

and newly married will be looking for housing, furniture, appliances and bank

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loans. Another good segmentation departure points are consumer lifestyles.

There are consumers who are marketers have targeted these groups and won

their hears and minds. Companies and industries 24-1 provides the survey

findings of Japanese consumer who tended to purchases through direct mail.

Once the target market is defined, the direct marketer needs to obtain

names of good prospects in the target market. Here is where list acquisition and

management skills come into play. The direct marketers best list is typically the

house list of past customers who have bought the companys products. The

direct marketers can buy additional lists from list brokers. Manes on these lists

are priced at so much a name. But external lists have problems, including name

duplication, incomplete data, obsolete addresses, and so on. The better lists

include overlays of demographic and psycho graphic information, in addition to

simple addresses. The main point is that the direct marketer needs to test in

advance to know their worth.

Offer strategy:

Direct marketers have to figure out an effective offer strategy to meet the

targets needs. Nash sees the offer strategy as consisting of five elements-the

product, the offer, the medium, the distribution method, and the creative strategy.

Fortunately all of these elements can be tested.

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Each medium has its own rule for effective use. Consider direct mail. In

developing a package mailing, the direct marker has to decide of five

components. Each component can help or hurt the overall response rate. The

outside envelope will be more effective if it contains an illustration, preferably in

color and /or a catch reason to open the envelop, such as the announcement of a

contest, premium, or benefit to the recipient. Envelopes are more effectivebut

more costly when they contain a colorful commemorative stamp, when the

address is hand typed or handwritten, and when the envelope differs in size or

shape from standard envelopes.

The sales letter should use a personal salutation and start with a headline

in bold type in the form of a news lead, a how/what/why statement, a narrative, or

a question to gain attention. The letter should be printed on good-quality paper

and run for as many pages as are necessary to make the sale, with some

indented paragraphs and underlining of pertinent phrases and sentences. A

computer type letter usually out pulls a printed letter, and the presence of a

pithy P.S. at the letters end increases the response rate, as does the signature

of someone whose title is appropriate and impressive. A colorful circular

accompanying the letter will also increase the response rate in most cases by

more than its cost. The reply should feature a toll-free number and contain a

perforated receipt stub and guarantee of satisfaction. The inclusion of a postage-

free reply envelope will dramatically increase the response rate.

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Consider on the other hand, a telemarketing campaign. Effective

telemarketing depends on choosing the right telemarketers, training them well,

and incentivizing them. Telemarketers should have pleasant voices and project

enthusiasm. Women are a script and eventually move toward more

improvisation. The opening lines are critical. They should be brief and lead with a

good question that catches the listeners interest.

The telemarketer needs to know how to end the conversation if the

prospect seems to be a poor one. The call should be made at the right time,

which is late morning afternoon to reach business prospects, and the evening

hours between7 to 9 to reach households. The telemarketing supervisor can

build up telemarketer enthusiasm by offering prizes to the first one who gets an

order to the top performer. Given the higher cost per contact telemarketing, and

privacy issues, precise list selection and targeting is critical. Clearly, other media,

such as catalog mail order, TV home shopping, and so on, have their own rules

for effective use.

Testing direct-marketing elements:

One of the great advantages of direct marketing is the ability to test under

real marketplace conditions the efficacy of different components of the offer

strategy. Direct marketers can test product features, copy, pric3es, media,

mailing lists, and the like. Although direct-marketing response rates are at the

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single-digit level, testing these components can add substantially to the overall

response rate and profitability.

The response rate to a direct-marketing campaign typically understates

the long-term impact of the campaign. Suppose only2% of recipients of a direct-

mail piece advertising Samsonite luggage place an order. A much larger

percentage became aware (direct mail has high readership), and some

percentage formed an intention to buy at a later date (the purchase will occur at a

retail outlet). Furthermore some percentage of the audience may mention

Samsonite luggage to others as a result of seeing the promotion. Some

companies are now measuring the impact of direct marketing on awareness,

intention to buy, and word-of-mouth to derive a larger estimate of the promotions

impact than is measured by the response rate alone.

Measuring the Campaigns success:

By adding up the campaign costs, the direct marketer can figure out in

advance the needed break-even response rate. This rate must be net of returned

merchandise and bad debts. Returned merchandise can kill an otherwise

effective campaign. The direct marketer needs to analyze the main causes of

returned merchandise, such as late arrival, defective merchandise, and damage

in transit, not as advertised and incorrect order fulfillment.

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By carefully analyzing past campaigns, direct marketers can steadily

improve their performance. Even when a specific campaign fails to break even, it

might still be profitable.

Suppose a membership organization spends $10,000 on a new-member

campaign and attracts 100 new members, each paying $70. it appears that the

campaign has lost $3,000 (=$10,000-$7,000). Bit if 80% of new members renew

their membership in the second year, the organization gets another $5,600

without any effort. It has now received $12,600 (=$7,000+$5,600) for its

investment of $10,000. to figure out the long-term break-even rate one needs to

figure out not only the initial response rate but the percentage who renew each

year and for how many years they renew.

This example introduces the concept of customer lifetime value. The

ultimate value of a customer is not revealed by the customers purchase during a

particular mailing. Rather the customers ultimate value is the profit made on all

the customers purchases overtime less the customer acquisition and

maintenance costs. For an average customer, one would calculate the average

customer longevity, average customer annual expenditure, and average gross

margin, properly discounted for the opportunity cost of money, les the average

customers whose expected lifetime value the company wants to assess.

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After assessing customer lifetime values, the company can focus its

communication efforts on the more attractive customers. These efforts include

sending communications that may not even sell the customer anythingbut

maintain the customers interest in the company and its products. Such

communications include free newsletters, tips and birthday greetings, al serving

to build a customer relationship.

Direct marketing has spawned a growing body of theory, measurement,

and competent practice. It adds a number of communication concepts and

capabilities to the marketers toolbox. When tied to a carefully developed

customer database, it can increase sales and profit yields and strengthens

customer relationship. It can provide more accurate prospect leads and trigger

new sales at a lower cost. Ultimately, marketers will make direct marketing and

database marketing an integral part of their marketing strategy and planning. Yet

they must do this responsibility.

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CHANNELS OF DISTRIBUTION

Direct marketing use several channels of products to the target customers.

Pioneers of direct marketing in India have successfully tried door-to-door selling.

This versatile mode of distribution can be used with equal effectiveness for high-

value gadgets such as water purifiers, specialty items such as health care

products, lifestyle products like perfume and cigarettes, as also for items of mass

consumption such as detergent, toilet soaps and eatable. The only problem is its

high costs.

Mail order delivery has its limitations. It is more suitable for books,

magazines, audio and videocassettes, small gifts and specialty item such as

fashion garments. Distribution through firms exclusive shops is more suitable for

up-market consumer product that requires selective distribution and /or efficient

after-sales services.

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PUBLIC AND ETHICAL ISSUES IN DIRECT MARKETING

Direct marketers and their customers usually enjoy mutually rewarding

relationships. Occasionally, however, a darker side emerges:

Irritation:

Many people find the increasing number of hard-sell direct-marketing

solicitations to be a nuisance. They dislike direct-response TV commercials that

are too loud, too long and too insistent. Especially, bothersome are dinnertime or

late-night phone calls, poorly trained callers and computerized calls placed by an

auto-dial recorded-message player.

Unfairness:

Some direct marketers take advantage of impulsive or less sophisticated

buyers. TV shopping shows and infomercials may be the worst culprits. They

feature smooth-talking hosts, elaborately staged demonstrations, claims of

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drastic price reductions, while they last time limitations, and unexcelled ease of

purchase to capture buyers who have low sales resistance.

Deception and fraud:

Some direct marketers design mailers and write copy intended to mislead

buyers. They may exaggerate product size, performance claims, or the retail

price. Political fundraisers sometimes use gimmicks such as look-alike

envelopes that resemble official documents, simulated newspaper clippings, and

fake honors and awards. Some nonprofit organizations pretend to be conducting

research surveys when they are actually asking leading questions to identify

donors. The Federal Trade Commission receives thousands of complaints each

year about fraudulent investment scams or phony charities. By the time the

buyers realize they have been biked and alert the authorities, the thieves have

fled to another location.

Invasion of privacy:

It seems that almost every time consumers order products by mail or

telephone, enter a sweepstakes, apply for a credit card, or take out a magazine

subscription, their names, addresses, and purchasing behavior may be added to

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several company databases. Critics worry that marketers may know too much

about consumers lives, and that they may use this knowledge to take unfair

advantage. Should AT&T be allowed to sell marketers the names of consumers

who frequently call catalog companies 800 numbers? Is it right for credit bureaus

to compile and sell lists of people who have recently applied for credit cards? Is it

right for states to sell the names and addresses of drivers license holders, along

with height, weight, and gender information, allowing apparel retailers to target

people with special clothing offers?

People in the direct-marketing industry are attempting to address these

issues. They know that, left untended, such problems will lead to increasingly

negative consumer attitudes, lower response rates, and calls for greater state

and federal regulation. In the final analysis, most direct marketers want the same

thing that consumers want: honest and well-designed marketing offers targeted

only to those consumers who appreciate hearing about the offer.

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SOME NEWER DIMENSIONS OF DIRECT MARKETING

Some emerging trends in direct marketing are telemarketing (marketing

through telephone) and electronic shopping. In India, suppliers of industrial

components and materials catering firms and service organization (such as

hotels and transporters) have being booking orders on telephone since long. But

telemarketing in an organized for emerged only in 1990s new-concept products

such as perfect ice and brands of established firms such as lakme (shie) ,

Cadbury (dollops) and Shaw Wallace ( single malt whisky) were the earlier

practitioners of tele marketing. With the expansion of communication network this

phenomena is catching up fast. Citibank has come out with tele banking in the

metros.

Television marketing is a Visual version of telemarketing. The marketers

buy a time-slot on television to demonstrate and describe the product, and

customers can calla toll free number and order the product. Private cable TV

network are also being used for television marketing

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Electronic shopping has two firms the videotext system permits a

customer having interactive cable TV connection to order products displayed on

TV screen by operating a small terminal. Alternatively, he can computer network

to receive information about different products and their prices, compare various

offers, choose the product and key in his product. Many firms have also started

hawking their ware on the worldwide computer web Internet.

Another significant development in the Indian context is the emergence of

syndicated distribution network services like the Bangalore based fresh force

the organization has created a pool of about 15,000 educated and trained sales

persons ready for hire by any direct marketing firm. In the beginning, only a few

publishing firms have shown interest, but if the experiment is successful several,

consumer goods companies may follow suit. More so because this is not only

cost effective but also promises quicker cash inflow. More recently, another

distribution trend to hit the Indian market is multi-layered marketing (MLM),

detailed as part of distribution. But this may not exactly fit the definition of

marketing. In the changing business environment, direct marketing is an

important alternative mode of approaching the customers. It make sense for the

companies to integrate direct marketing with conventional marketing, to keep

track of the customers and maintain regular contract with him. Not only will it

promote a more customer-friendly and caring image of the company, it will also

facilitate creation of a long-term customer relationship. Firms such as Telco

Philips, titan and nestle, who otherwise their market through conventional

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channels have already developed large database on their customers and

maintain regular contract with them through direct communication. With more

and more firms realizing the value of retaining a customer, an integrated

approach towards marketing will gain more currency.

THE GROWING USE OF INTEGRATED DIRECT MARKETING

Although direct and on-line marketing are booming, a large number of

companies still relegate them to minor roles in their communication-promotion

mix. Advertising and sales-promotion departments receive most of the

communication dollars and jealously guard their budgets. The sales force may

also see direct marketing as a threat when it has to turn over smaller customers

and prospects to direct mailers and telemarketers.

However, companies are increasingly recognizing the importance of

integrating their marketing communications. Some companies are appointing a

chief communications officer (CCO) in addition to a CIO (Chief Information

Officer). The CCO supervises specialists in advertising, sales promotion, public

relations, and direct-on-line marketing. The aim is to establish the right overall

communication budget and the right allocation of funds to each communication

tool. This movement has been variously called integrated marketing

communication (IMC), integrated direct marketing (IDM), and maxi marketing.

How can different communication tools be integrated in campaign

planning? Imagine a marketer using a single tool in a one shot effort to reach

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and sell a prospect. An example of a single-vehicle, single-stage campaign is a

one-time mailing offering a cookware item. A single-vehicle, multiple stage

campaign would involve successive mailings to the same prospect. Magazine

publishers, for example, send about four renewal notices to a household before

giving up. A more powerful approach is he multiple-vehicle, multiple-stage

campaign. Consider the following sequence:

News campaign about a new product Paid ad with a response

mechanism

Direct mail Out bound telemarketing Face-to-face sales call

Ongoing communication.

For example, Compaq might launch a new laptop computer by first

arranging new stories to stir interest. Then Compaq might place full-page ads

offering a free booklet on how to buy a computer. Compaq would then mail the

booklet to those who responded, along with an offer to sell the new computer at a

special discount before it arrives in retail stores. Suppose 4 percent of those who

receive the booklet order the computer. Compaq telemarketers then phone the

96 percent who did not buy to remind them of the offer. Suppose another 6

percent now order the computer. Those who do not place an order are offered a

face-to face sales call or demonstration in a local retail store. Even if the prospect

is not ready to buy, there is ongoing communication.

Ernan Roman says that the use of response compression, whereby multiple

media are deployed within a tightly defined time frame, increases message reach

and impact. The underlying idea is to deploy a sequence of messages with

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precise timing intervals in the hope of generating incremental sales and profits

that exceed the costs involved. Roman cities a Citicorp-campaign to market

home equity loans. Instead of usually only mail plus an 800 number, Citicorp

used mail plus coupon plus 800 number plus outbound telemarketing plus print

advertising. Although the second campaign was more expensive, it resulted in a

15 percent increase in the number of new account compared with direct mail

alone.

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CUSTOMER DATABASES AND DIRECT MARKETING

Don peppers and Martha Rogers list the main differences between mass

marketing one to one marketing companies that know their individual customer

customize their product, offer, message, shipment method, and payment method

maximize customer appeal. Todays companies are building customer database.

A customer database is an organized collection of comprehensive data

about individual customer or prospect that is current, accessible and for such

marketing purposes as lead generation, lead qualification sale of a product or

service, or maintenance of customer relationship. Data base marketing is the

process of building, maintenances, and using customer database and other

database (products, suppliers, and resellers) for the purpose of contracting and

transacting.

The marketing model for integrated marketing.

Rapp and Collinss maxi marketing model consists of nine steps.

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1. Maximized targeting calls upon the marketer to define and identify the best

prospects for offer. The marketer either buys mailing lists or searches the

customer database for characteristic that point to high interest, ability to

pay, and readiness to buy. Best customer includes those who buy with

some frequency, dont return many orders, dont complain and pay on

time. Mass marketers can go fishing for prospects with direct response

advertising in such mass media as television, newspaper supplements,

and magazine insert card.

2. Maximized media lead the direct marketer to examine the exploding

variety of media and choose those that allow for convenient two-way

communication and measurement of results.

3. Maximized accountability calls for evaluating campaigns on the base of

cost-per-prospect response rather that on the cost-per-thousand

exposures.

4. Maximized awareness involves searching for message that will break

through the clutter and reach the prospects hearts and minds by means of

whole brain advertising that appeals tp a persons rational and emotional

sides.

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5. Maximized activation means that advertising must trigger purchase or at

least advance prospects to a measurably higher stage of buying

readiness. Activation devices include statements such as send for

information and reply coupon must be returned by September 30.

6. Maximized synergy involves finding ways of doing double duty with the

advertising for instances, combining awareness building with direct

response, promoting other distribution channels and sharing cost with

other advertisers.

7. Maximized linkage calls for linking the advertising to the sale by

concentrating on the better prospects and spending more on the total

budget to convert them.

8. Maximized sales through database building calls on the marketer directly

to know customer by cross-selling, upgrading and introducing new

products. The marketer keeps enhance the database with more customer

information and ends ups with a rich private advertising medium.

9. Maximized distribution involves building additional channels to reach

prospects and customer- for instance, when a direct marketer opens retail

stores, or when a manufacture such as general food decides to sell a

premium brand of coffee directly to the customer.

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Many companies confuse a customer mailing list with a customer

database. A customer mailing list is simply a set of names, addresses and

telephone numbers. A customer database contains much more information. In

business marketing the customer profile contains the products and services the

customer has brought; past volumes, prices, and profits; tam member names

(and their age, birthday and hobbies and favorite foods); status of current

contracts; an estimates of the suppliers shares of the customer business;

competitive suppliers; assessment of competitive strengths and weakness in

selling and servicing the account; and relevant buying practice, patterns and

polices. In consumer marketing the customer database contains demographics

(age, income family members birthdays) psychographics (activities, interest and

opinions), past purchase, and other relevant information about an individual. For

example the catalog company Fingerhut possesses some 1,400 pieces of

information about each of the 30million customer database.

Database marketing is mostly frequently used by business marketers and

service retailers (hotels banks and airlines) it is used less often by packaged

goods retailers and consumer packaged goods companies, though some

(Quaker oats, Ralston Purina and Nabisco among them) have been

experimenting in this area. A well-developed customer database is a proprietary

asset that can give the company a competitive edge.

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Armed with the information in its database, a company can achieve much

more precision that it can with mass marketing segment marketing or niche

marketing. The company can identify small groups of customer who receive fine

tuned marketing offers and communication.

Conclusion:

Direct Marketing is an interactive mode of marketing through which the

marketer reaches out to his target market at any location. Direct marketing helps

companies to focus their marketing efforts, and hence to that an effect is more

focused and targeted than conventional or general marketing.

Teleshopping, home shopping channels, catalogue marketing and online

shopping are some of the tools that enable companies to cater to this core

customer value. Therefore, database marketing is an interactive approach to

marketing, using all communication tools and media vehicles to reach to the

target market. Cross selling cal also be effectively managed through database

marketing. This is especially true for firms operating in several

products/businesses and requiring the same database. The strengths of

database marketing are its ability to be measured, testes and customized.

The future of Direct Marketing in India is dependent on factors like

reaching out to non-metro/non-urban markets, enhancing credibility of the offer,

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wider use of debit and credit cards and the emergence of specialized database

firms.

An Epilogue

Competition is an origin to Innovations and innovations germinates the

seeds of a successful and prosperous dawn. Hence, Direct Marketing has

become a key for a company to endure in this competitive age.

Today, Customer is a King and their kaleidoscopic needs are enforcing the

leading companies to emerge with the unique new products. Even the increase in

income level has altered demand and consumption patterns of the urban

consumers. The middle class people are looking for quality goods at reasonable

prices.

This enunciate the significance of Direct Marketing in targeting the

consumers and hammering them continuously so as to help them get acquainted

with the various new products.

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BIBLIOGRAPHY

REFERENCES:

1) PRINCIPLES OF MARKETING: PHILIP KOTLERGARY ARMSTRONG

2) MODERN MARKETING STRATEGY: EDWARD C. BURSKJOHN F. CHAPMAN

3) NEW PRODUCTS AND DIVERSIFICATION: PETER M. KRAUSHAR

4) MARKETING MANAGEMENT: RAJAN SAXENA

WEBLIOGRAPHY

www.yahoo.com

www.google.com

www.indiainfoline.com

www.eurekaforbes.com

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