Management Thesis II

Guided by: M/s. Moumita Sammadder

Presented by: Debajyoti Bhattacharya

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A study on the consumer perception on the strategies adopted in channel marketing vis-à-vis direct marketing.

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Contents

Topic Page

1. Acknowledgement………………………4

2. Abbreviation…………………………….5

3. Summary…………………………………6-7

4. Introduction…………………………….8-14

5. Research Methodology………………..15-17

6. Literature Review………………………18-32

7. Empirical Analysis……………………..33-39

8. Findings and Suggestions……………..40-44

9. Recommendations……………………...45-46

10. Appendices………………………………47-48

11. References………………………………..49

12. Glossary

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Acknowledgement

My respect and thanks goes to our faculty M/s. Moumita Sammader

who assigned to me such work from which I learned different aspects.

She was patiently co-operative while guiding me in this work. My

friends has always been ideating and helping me with innovative

ideas.

I hope I have done justice to their views. Further I hope I am able to

properly complete the assignment given to me by my faculty, within

my capabilities.

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AbbreviationHUL – Hindusthan Uniliver Limited

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Summary

The study deals with the customer perception about the distribution and

marketing strategies adopted by companies. Two unique distribution

strategies upon which the study entails are Channel distribution and

Network marketing. Further two major companies are identified for the

theses are Hindusthan Unilever Limited (channel distribution) and

Amway India Corporation (network marketing). The various processes

to progress in the thesis are as follows:

Understanding the subject matter thoroughly.

Reading articles and magazines on the topic.

Primary data collection was the process decided.

Hypothesis was set.

Statistical tools have been chosen, such as co-relation and Z-

test.

To find the result of the hypothesis and get sample for it, a

questionnaire was made.

The questionnaire was made upon specific parameters.

The parameters were set to fulfill the requirements of the

hypothesis.

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Data have been collected.

Collected data have been tabulated and analysed.

With the recommendation and further scope of research the

project has been concluded.

The project is a big learning to the researcher. It helps a lot to apply the

theoretical knowledge in the practical field which makes the

understanding of the issue more clear. The project indulges the

researcher to know the whereabouts of the topic as well as the sector

and the company as well.

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Introduction

Continuous technological advancement has ushered in a new era of

direct marketing. Varied intermediaries have augmented the distance

between the manufacturer and the ultimate consumer. In this research

the major aim is to analyze the consumer perception of the two such

intermediary marketing paradigms. Modernization of living and search

for new source of earning has given eminence to Direct Marketing.

Advent of Amway in 1997 has magnified the avenues open for a middle

class Indian to leverage on the concept and earn a sufficient income for

himself/herself. This study thrives on the acceptability of such concept

vis-à-vis traditional historical channel of marketing. This study revolves

around the strategies involved and its effect on consumer perception.

The competition from Direct Marketing is piling upon the traditional

marketers as the Direct Marketing companies are luring and satisfying

the consumers with high quality world standard products. The rise in

living consciousness amongst normal Indians and the influence of the

western culture is accentuating their desire to live life differently. Thus

the traditional marketer’s product that till few years back was a

monopoly is now operating under a competitive scenario. Its ripe time to

study the consumer perception of the two strategies. The study will throw

some light on which mode of marketing has more probability of

sustaining itself in the long run on the basis of customer acceptability or

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it will be a scenario where every strategy will be formulated with a

scavenging eye on the market share thus on the consumer’s pocket. Or

else both the strategies will operate within its share of niche segment.

The research is spaced for a period of two months. Being a type of

consumer behavior and perception study it is primary research. The

study will base its conclusions on the information generated from a

questionnaire. Sample for this study is set at 50 individuals. The method

of sampling will be qualified random sampling. The qualification will be

on the basis of consumers who are in terms with direct marketing

company like Amway (the company chosen as a sample for the study)

and Hindusthan Unilever Limited (the company chosen as a sample for

the study).The hypothesis will be set on the questions in the

questionnaire and will be tested with specific statistical tools.

Overview of the company:

Amway- Amway is a multi-level marketing, or network marketing

company founded in 1959 by Jay Van Andel and Rich DeVos. Based

in Ada, Michigan, the company and family of companies under

Alticor reported sales of US$7.2 billion for the year ending

December 31, 2007, marking the company’s sixth straight year of

growth. Its product lines include home care products, personal care

products, jewelry, electronics, Nutrilite dietary supplements, water

purifiers, air purifiers, insurance and cosmetics. Amway conducts

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business through a number of affiliated companies in more than

ninety countries and territories around the world. Since 1999 it has

operated in the United States and Canada as Quixtar, though the

North American organization is to merge into a Amway Global

brand.

Jay Van Andel and Richard DeVos were introduced to the Nutrilite

Products Corporation, a California-based direct sales company founded

Dr. Carl Rhenborg, inventor of the multivitamin. Telephoning first to

check interest, Neil Maaskant, a distant relative and second cousin to

Jay traveled from Chicago, Illinois to Grand Rapids, Michigan to talk

about a new business he started. In August, 1949,[2] after a long talk past

2:00 am the next morning, Richard DeVos and Jay Van Andel signed up

and became distributors of a line of food supplements called Nutrilite

Products with all the related rights, honors, and privileges. The next

day, they sold their first box, for $19.50, and then did not do a thing for

the next two weeks. Shortly after, at the urging of Jay's cousin and

sponsor, they travelled to Chicago to find out exactly what they had got

into. The meeting was at a downtown hotel, with over 100 people in

attendance. They heard Lee Mytinger speak, watched an educational

film on Nutrilite, and met and talked to people who had been distributors

for several years. Eventually they decided to go all the way and put all

their effort into the opportunity. They stopped at a gas station along the

way, and sold their second box of supplements.

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Ja-Ri Corporation was the original multi-level marketing distributorship

for Nutrilite nutritional products, founded by Jay Van Andel and Richard

DeVos in 1959. Ja-Ri's name comes from the founders' first names, Jay

and Richard. Friends since childhood, Van Andel and DeVos became

business partners in endeavors such as a hamburger stand, air charter

service, and a sailing business.

Ja-Ri was incorporated in 1959, and changed its name to "Amway" in

1963 which was a deliberate abbreviation of "American Way". The

intent of Amway's founders was to create a business using a novel means

of product distribution that facilitates entrepreneurship, understanding

of economic management, and economic independence among its

associates (i.e. distributors; the term currently in use is Independent

Business Owners, or IBOs).

Their first product was the cleaner L.O.C. (Liquid Organic Cleaner).

Originally sold by its inventor under the name Frisk, it was noticed by

Nutrilite distributor Fred Hansen who brought it to Rich DeVos and Jay

Van Andel as a product that they could use to launch their own

company. Van Andel and DeVos and some of their distributors including

Hansen were getting frustrated by the seemingly inconsistent way

Nutrilite founder Dr. Rehnborg wanted his products to be sold. DeVos

and Van Andel bought the rights to make and distribute Frisk and

changed the name to L.O.C. thereby beginning Amway. In 1964 the

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Amway Sales Corporation, Amway Services Corporation, and Amway

Manufacturing Corporation, merged to form a single company.

Amway bought the Mutual Broadcasting System radio network in 1977

and sold it in 1985.

Amway expanded overseas to Australia in 1971, to Europe in 1973, to

parts of Asia in 1974, to Japan in 1979, to Latin America in 1985, to

China in 1995, to Africa in 1997, to India in 1998, to Russia in 2005,

and to Vietnam in 2008.

The product line grew, with a new detergent SA8 added in 1960, and

later the hair care range Satinique (1965) and Artistry(1968). Amway

bought control of Nutrilite in 1972 and full ownership in 1994.

In 1999 the founders of the Amway corporation established a new

holding company, named Alticor, and launched three new companies, 1)

a sister (and separate) Internet-based company named Quixtar, 2)

Access Business Group, and 3) Pyxis Innovations. Quixtar replaced the

North American business of Amway in 2001, with Amway operating in

the rest of the world; however, in June 2007 it was announced that the

Quixtar brand would be phased out over an 18 to 24 month period in

favor of a unified Amway brand worldwide. The other two companies,

Pyxis Innovations (since dissolved) and Access Business Group, were

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established to help take Alticor into new strategic directions. Amway's

internet sales in Europe are conducted via their Amivo website.

Later additions to the core product range included water filters and

cookware. The eSpring water filter, introduced in 2000 and developed by

Alticor, includes eCoupled wireless power induction technology. Alticor

subsidiary Fulton Innovation introduced the technology in other

consumer electronic products at the 2007 International Consumer

Electronics Show. Companies licensing the technology include General

Motors, Motorola and Visteon.

HUL - Hindustan Unilever Limited (HUL) is India's largest fast moving

consumer goods company, with leadership in Home & Personal Care

Products and Foods & Beverages. HUL's brands, spread across 20

distinct consumer categories, touch the lives of two out of three Indians.

They endow the company with a scale of combined volumes of about 4

million tonnes and sales of Rs.13,718 crores.

The mission that inspires HUL's over 15,000 employees is to "add

vitality to life". With 35 Power Brands, HUL meets everyday needs for

nutrition, hygiene, and personal care with brands that help people feel

good, look good and get more out of life.

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It is a mission HUL shares with its parent company, Unilever, which

holds 52.10% of the equity. A Fortune 500 transnational, Unilever sells

Foods and Home and Personal Care brands in about 100 countries

worldwide.

The fast moving consumer goods (FMCG) industry is an unforgiving

one. “If a retailer’s shelves are empty of a

manufacturer’s product, he will simply fill them with a competing

product,” says KS Arunkumar, IT Group Manager, Hindustan Unilever

Limited (HUL). This challenge of ensuring that the business is optimised

to cater to ever- changing market demands is an issue that HUL is

deeply familiar with. Established in 1931, this stalwart of the India

FMCG market is a subsidiary of the world-renowned Unilever Group.

Behind HUL’s vast business footprint that spans 4,000 distributors is an

entity consisting of 15,000 staff as well as multiple factories, warehouses

and branches.

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Research Design

Modern day market dynamics are as never before. Such dynamics are

the results of polished consumer behaviour and inculcated knowledge by

them. Thus the current scenario is also changing in the industry to

satisfy all and sundry need of the consumer. Different marketers are

differentiating their strategies with respect to the 4Ps of marketing. This

study revolves around analyzing the strategies involved and its effect on

the ultimate consumers, which in the long run modulate their buying

pattern and behaviour.

As already mentioned Hindusthan Unilever Limited and Amway India

Corporation has been randomly chosen for the study. Such sampling can

be justified on the basis of their market share in their core competency

sector. HUL is the major channel distributing company while Amway

India Corporation has revolutionized network marketing with their

unique strategies. Primary research as the main research mode has been

chosen so as to have a fair idea of the population. Various secondary

data has also enabled the study. Such references are given in the

respective section. To find out the relevance of their strategy and analyse

customer perception a questionnaire has been framed as an interface

tool to collect the information. The questionnaire has been framed

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keeping in mind the requirements of the study. The sample for the study

is set at 100 people by simple random sampling.

After the collection of the data co-relation between Question-7 and

Question 3,4,5,6 is to be calculated, (please refer to the questionnaire).

Further to have a clear idea of the sample separate hypothesis has been

set for every question from Question 8 (a) to Question 8 (g). Such

hypotheses are:

8a. HO == (a) I DO NOT prefer to receive extensive training programme

about product utility before using it.

8b. H0 = DO NOT prefer to buy products from nearest kirana shop/

retail outlet.

8c. H0 = DO NOT Prefer to know the utility from direct selling agent.

8d. H0 = DO NOT prefer getting commissions for using a product.

8e. H0 = Not ready to buy medium quality products at cheap price.

8f. H0 = DO NOT prefer to use products only if given a commission. 8g.

H0 = Purchase of a product is not made easier by

celebrity endorsements.

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Such hypotheses are set so as to have a fair idea of the population.

Hypothesis has been tested by Z-test. Hypothesis testing has helped

enable the study to conclude on customer perception about the strategies

involved in the separate distribution process.

After that, was the work of tabulation of data which helped a lot to reach

to the conclusion.

This is the following process which has been followed for completion of

the project:

Define research problem

Review concepts and theory

Review previous research finding

Formulate hypothesis

Design research (including sample design)

Collect data (execution)

analyze data

Interpret and report

Feed forward

Feed forward

Feed back

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Review of Literature

The effectiveness of any promotional strategy depends, in part, on how

accurately channel members predict consumers' perceptions of their

promotional activity. However, empirical research on channel member

predictions and their accuracy is virtually nonexistent. In this article we

examine manufacturer and retailer beliefs about consumers' (and each

others') perceptions of sales promotions and assess the accuracy of these

predictions. Our findings indicate that manufacturers and retailers hold

similar, but equally inaccurate views of consumers' industry knowledge.

When assessing consumers' specific beliefs about different types of

promotions, these channel members underestimate consumer knowledge.

Their motivational knowledge, however, appears quite accurate

-whether predicting consumer or other channel member perceptions of

motivations. The similarity of supplier and retailer knowledge bodes well

for channel efficiency, yet limitations in their understanding of consumer

knowledge about promotions may lead to weakness in channel marketing

strategies.

When making strategic decisions regarding price promotions,

manufacturers and retailers rely on their expectations of consumer

reactions to the promotion.,

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Dickson & Key, 1990). However, consumer reactions often depend on

their beliefs about channel member motives for offering the promotions.

Given this inherent interdependence, the effectiveness of channel

promotional strategy may depend on how accurately channel members

understand consumer perceptions of their promotional activity.

For example, on seeing Heinz ketchup on sale at Kroger's, a consumer

may believe that the savings are provided by the manufacturer,

potentially creating goodwill for this supplier. Conversely, consumers

may believe that Kroger's is providing the savings. This perception may

create goodwill for Kroger's, but have little effect on Heinz brand equity.

When deciding whether to reinforce or modify their promotional

strategy, Kroger's and Heinz may benefit from an accurate

understanding of the perceptions held by their consumers.

Similarly, Heinz may believe that consumers think that the price cuts on

its brands are offered to encourage the purchase of the Heinz brand.

Consumers, however, may actually think that the price cuts are offered

to get rid of excess inventory. If consumers make this latter inference,

price promotions may not be an optimal strategy for encouraging sales

of a popular brand because of the potential for damage to brand equity.

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An accurate understanding of consumer inferences related to store

brands could also influence the promotional mix strategies employed by

retailers and manufacturers. For example, the majority of consumers

may believe that national manufacturers produce store brands. If

retailers incorrectly believe that consumers think that retailers makes

their own store brands, then the retailers may not price or promote their

labels effectively, charging a lower price than consumers are willing to

pay.

These examples highlight the importance of understanding consumers'

perceptions of retailer and manufacturer pricing strategies. These are

policies that (Friestad & Wright, 1994) call persuasion knowledge.

However, empirical research documenting the beliefs that channel

members use when developing their own goals and tactics is virtually

nonexistent (Friestad & Wright, 1994). While some prior empirical

research has focused on the content of consumers' persuasion knowledge

(Dickson & Sawyer, 1986; Krishna, Currim & Shoemaker, 1991;

Raghubir, 1994; Raghubir & Corfman 1994), little work has focused on

channel member predictions of this knowledge.

Multi channel consumer perception – The researcher presents a

structural model of consumer trust in a multi Channel retailer. The

model was developed on a sample of 1048 consumers who responded to

a questionnaire linked to the website of a large German multi-channel

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retailer. The study identifies perceived privacy concerns as the strongest

influence on trust in the e-shop, followed by perceived reputation and

perceived size of the offline stores. We further differentiate between

respondent groups based on their familiarity with the retailer’s e-shop

and stores. In general, trust increases over familiarity with the

Retailer whereas the influence of perceived privacy has the same

importance over different levels of familiarity. This research may be of

interest to multi-channel retailers, who could use the findings to better

align their offline and online marketing strategy. In particular, the

results could be used to improve the website design and the delivery

options of a multi-channel retailer. Internet-only retailers may consider

an increase of marketing efforts in the offline domain.

The distribution of products across multiple sales channels — often

referred to as multi-channel retailing — is the norm today. According to

a recent survey, multi-channel retailers in the US increased their online

market share from 52 % in 1999 to 75 % in 2003 — in contrast to

Internet-only retailers, who lost market share correspondingly[Shop.org

and Forrester Research 2004]. For some pure Internet retailers,

changes towards multi-channel retailing

can be observed

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. The increasing prevalence of multi-channel retailing calls for empirical

research on the reasons for consumers’ appreciation of that business

model. The main research question of this paper is to find out whether

the perception of a retailer's physical stores has an influence on

consumers' trust in the retailer's e-shop, which may ultimately lead to

increased sales. Moreover, this paper aims at quantifying the strength of

influence of the three antecedents of consumer trust perceived store size,

perceived store reputation and perceived privacy of the e-shop.

A number of surveys suggest that the Internet has a distinct influence on

offline sales. In a series of studies conducted by the research consultancy

Forrester, retailers claimed that about 24 % of their offline sales in 2003

were influenced by the Web, which is up from 15 % in 2002 [Shop.org

and Forrester Research 2004]. A further study

estimates that about half of the 60 million consumers in Europe with an

Internet connection bought products offline after having investigated

prices and details online [Markillie 2004]. A study by Doyle et al.

[2003] analyzed the influence of store perception on online sales.

Distribution (or place) is one of the four elements of marketing mix. An

organization or set of organizations (go-betweens) involved in the

process of making a product or service available for use or consumption

by a consumer or business user. Frequently there may be a chain of

intermediaries, each passing the product down the chain to the next

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organization, before it finally reaches the consumer or end-user. This

process is known as the 'distribution chain' or the 'channel.' Each of the

elements in these chains will have their own specific needs, which the

producer must take into account, along with those of the all-important

end-user.

A number of alternate 'channels' of distribution may be available:

• Selling direct, such as with an outbound salesforce or via mail

order, Internet and telephone sales

• Agent, who typically sells direct on behalf of the producer

• Distributor (also called wholesaler), who sells to retailers

• Retailer (also called dealer or reseller), who sells to end customers

• Advertisement typically used for consumption goods

Distribution channels may not be restricted to physical products alone.

They may be just as important for moving a service from producer to

consumer in certain sectors, since both direct and indirect channels may

be used. Hotels, for example, may sell their services (typically rooms)

directly or through travel agents, tour operators, airlines, tourist boards,

centralized reservation systems, etc.

There have also been some innovations in the distribution of services.

For example, there has been an increase in franchising and in rental

services - the latter offering anything from televisions through tools.

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There has also been some evidence of service integration, with services

linking together, particularly in the travel and tourism sectors. For

example, links now exist between airlines, hotels and car rental services.

In addition, there has been a significant increase in retail outlets for the

service sector. Outlets such as estate agencies and building society

offices are crowding out traditional grocers from major shopping areas.

Distribution channels can thus have a number of levels. Kotler defined

the simplest level that of a direct contact with no intermediaries

involved, as the 'zero-level' channel.

The next level, the 'one-level' channel, features just one intermediary; in

consumer goods a retailer, for industrial goods a distributor. In small

markets (such as small countries) it is practical to reach the whole

market using just one- and zero-level channels.

In large markets (such as larger countries) a second level, a wholesaler

for example, is now mainly used to extend distribution to the large

number of small, neighborhood retailers or dealers.

In Japan the chain of distribution is often complex and further levels are

used, even for the simplest of consumer goods.

In Bangladesh Telecom Operators are using different Chains of

Distribution, especially 'second level'.

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In IT and Telecom industry levels are named "tiers". A one tier channel

means that vendors IT product manufacturers (or software publishers)

work directly with the dealers. A one tier / two tier channel means that

vendors work directly with dealers and with distributors who sell to

dealers. But the most important is the distributor or wholesaler.

Direct marketing is a sub-discipline and type of marketing. There are

two main definitional characteristics which distinguish it from other

types of marketing. The first is that it attempts to send its messages

directly to consumers, without the use of intervening media. This

involves commercial communication (direct mail, e-mail, telemarketing)

with consumers or businesses, usually unsolicited. The second

characteristic is that it is focused on driving purchases that can be

attributed to a specific "call-to-action." This aspect of direct marketing

involves an emphasis on trackable, measurable positive (but not

negative) responses from consumers (known simply as "response" in the

industry) regardless of medium.

If the advertisement asks the prospect to take a specific action, for

instance call a free phone number or visit a website, then the effort is

considered to be direct response advertising.

Some direct marketers also use media such as door hangers, package

inserts, magazines, newspapers, radio, television, email, internet banner

ads, digital campaigns, pay-per-click ads, billboards, transit ads. And

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according to Ad Age, "In 2005, U.S. agencies generated more revenue

from marketing services (which include direct marketing) than from

traditional advertising and media. The most common form of direct

marketing is direct mail, sometimes called junk mail, used by

advertisers who send paper mail to all postal customers in an area or to

all customers on a list. Any low-budget medium that can be used to

deliver a communication to a customer can be employed in direct

marketing. Probably the most commonly used medium for direct

marketing is mail, in which marketing communications are sent to

customers using the postal service. The term direct mail is used in the

direct marketing industry to refer to communication deliveries by the

Post Office, which may also be referred to as "junk mail" or "admail"

and may involve bulk mail.

Junk mail includes advertising circulars, catalogs, free trial CDs, pre-

approved credit card applications, and other unsolicited merchandising

invitations delivered by mail or to homes and businesses, or delivered to

consumers' mailboxes by delivery services other than the Post Office.

Bulk mailings are a particularly popular method of promotion for

businesses operating in the financial services, home computer, and

travel and tourism industries.

In many developed countries, direct mail represents such a significant

amount of the total volume of mail that special rate classes have been

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established. In the United States and United Kingdom, for example,

there are bulk mail rates that enable marketers to send mail at rates that

are substantially lower than regular first-class rates. In order to qualify

for these rates, marketers must format and sort the mail in particular

ways - which reduces the handling (and therefore costs) required by the

postal service.

Advertisers often refine direct mail practices into targeted mailing, in

which mail is sent out following database analysis to select recipients

considered most likely to respond positively. For example a person who

has demonstrated an interest in golf may receive direct mail for golf

related products or perhaps for goods and services that are appropriate

for golfers. This use of database analysis is a type of database

marketing. The United States Postal Service calls this form of mail

"advertising mail"

The second most common form of direct marketing is telemarketing, in

which marketers contact consumers by phone. The unpopularity of cold

call telemarketing (in which the consumer does not expect or invite the

sales call) has led some US states and the US federal government to

create "no-call lists" and legislation including heavy fines. This process

may be outsourced to specialist call centres.

In the US, a national do-not-call list went into effect on October 1, 2003.

Under the law, it is illegal for telemarketers to call anyone who has

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registered themselves on the list. After the list had operated for one year,

over 62 million people had signed up. The telemarketing industry

opposed the creation of the list, but most telemarketers have complied

with the law and refrained from calling people who are on the list.

Email Marketing may have passed telemarketing in frequency at this

point, and is a third type of direct marketing. A major concern is spam,

which actually predates legitimate email marketing. As a result of the

proliferation of mass spamming, ISPs and email service providers have

developed increasingly effective E-Mail Filtering programs. These filters

can interfere with the delivery of email marketing campaigns, even if the

person has subscribed to receive them, as legitimate email marketing

can possess the same hallmarks as spam.

Leaflet Distribution services are used extensively by the fast food

industries, and many other business focusing on a local catchments

Business to consumer business model, similar to direct mail marketing,

this method is targeted purely by area, and costs a fraction of the

amount of a mails hot due to not having to purchase stamps, envelopes

or having to buy address lists and the names of home occupants.

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A fourth type of direct marketing, broadcast faxing, is now less common

than the other forms. This is partly due to laws in the United States and

elsewhere which make it illegal.

A fifth type of direct marketing has emerged out of the market prevalence

of personal voice mailboxes, and business voicemail systems. Due to the

ubiquity of email marketing, and the expense of direct mail and

telemarketing, voicemail marketing presented a cost effective means by

which to reach people with the warmth of a human voice.

Abuse of consumer marketing applications of voicemail marketing

resulted in an abundance of "voice-spam", and prompted many

jurisdictions to pass laws regulating consumer voicemail marketing.

More recently, businesses have utilized guided voicemail (an application

where pre-recorded voicemails are guided by live callers) to accomplish

personalized business-to-business marketing formerly reserved for

telemarketing. Because guided voicemail is used to contact only

businesses, it is exempt from Do Not Call regulations in place for other

forms of voicemail marketing.

Couponing is used in print media to elicit a response from the reader. An

example is a coupon which the reader cuts out and presents to a super-

store check-out counter to avail of a discount. Coupons in newspapers

and magazines cannot be considered direct marketing, since the

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marketer incurs the cost of supporting a third-party medium (the

newspaper or magazine); direct marketing aims to circumvent that

balance, paring the costs down to solely delivering their unsolicited

sales message to the consumer, without supporting the newspaper that

the consumer seeks and welcomes.

Direct marketing on TV (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 0:30 second or 0:60 second

commercials that ask viewers for an immediate response (typically to

call a phone number on screen or go to a website).

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. These both allows marketers to reasonably

conclude that the calls are due to a particular campaign, and allows the

marketers to obtain customers' phone numbers as targets for

telemarketing. Under the Federal Do-Not-Call List rules in the US, if the

caller buys anything, the marketer would be exempt from Do-Not-Call

List restrictions for a period of time due to having a prior business

relationship with the caller. Major players are firms like QVC, Thane

Direct, and Interwood Marketing Group then cross-sell, and up-sell to

these respondents.

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One of the most famous DRTV commercials was for Ginsu Knives by

Ginsu Products, Inc. of RI. Several aspects of ad, such as it's use of

adding items to the offer and the guarantee of satisfaction were much

copied and came to be considered part of the formula for success with

short form direct response TV ads (DRTV)

Direct selling is the sale of products by face-to-face contact with the

customer, either by having salespeople approach potential customers in

person, through indirect means such as Tupperware parties.

For many marketers, a comprehensive direct marketing campaign

employs a mix of channels. It is not unusual for a large campaign to

combine direct mail, telemarketing, radio and broadcast TV, as well as

online channels such as email, search marketing, social networking and

video. In a report conducted by the Direct Marketing Association, it was

found that 57% of the campaigns studied were employing integrated

strategies .Of those, almost half (47%) launched with a direct mail

campaign, typically followed by e-mail and then telemarketing.

The need to explore consumer reactions to any form of marketing is

central to the marketing concept and this paper reports part of an

industry-funded project to investigate how consumers interact with

direct marketing. The programme was qualitative, based on both

individual depth interviews and group discussions. A theme of

“paradox” emerged from the research in a variety of ways. Consumers

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generally take a pragmatic view of marketing activity, but at the same

time they are sceptical of much direct marketing. The research identifies

consumers’ key concerns with direct marketing as: privacy, control and

relevance. The resulting “gaps” between direct marketing practice and

consumer expectations and desires produce clearer areas for the direct

marketer to address.

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Empirical Analysis1. HO = proportion of the people are accepting that they prefer to receive extensive training programme about product utility before using it is 50%

H0 : (P = 0.5)

H1 = More than 50% of people are accepting that they prefer to receive extensive training programme about product utility before using it

(>50%)

H1: (P>0.5)

Observed value – Expected value Z= ------------------------------------------------------- S.E.

Expected value 0.5(P)Observed value = 74/100 =0.74(Q) = 1-0.5 = 0.5

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S.E.(Standard error) = √PQ/n [n=sample size] =√0.5∗ 0.5/100 = 0.05

Z = (0.74- 0.5)/ 0.05 = 4.8

At 5% level of significance z= 1.645As z=4.8, so, we reject the null hypothesis and accept the alternative hypothesis i.e. more than 50% of people are accepting that they prefer to receive extensive training programme about product utility before using it

2. H0 = proportion of the people are accepting that they prefer to buy

products from nearest kirana shop/ retail outlet is 50%

H0 : (P = 0.5)

H1 = More than 50% of people are accepting that they prefer to buy products from nearest kirana shop/ retail outlet

(>50%)

H1: (P>0.5)

Observed value – Expected value Z= ------------------------------------------------------- S.E.

Expected value 0.5(P)Observed value = 94/100 =0.94(Q) = 1-0.5 = 0.5

S.E.(Standard error) = √PQ/n [n=sample size]

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=√0.5∗ 0.5/100 = 0.05

Z = (0.94- 0.5)/ 0.05 = 8.8

At 5% level of significance z= 1.645As z=8.8, so, we reject the null hypothesis and accept the alternative hypothesis i.e. more than 50% of people are accepting that they prefer to buy products from nearest kirana shop/ retail outlet

3. H0 = proportion of the people are accepting that they prefer to know the utility from the direct selling agent is 50%

H0 : (P = 0.5)

H1 = More than 50% of people are accepting that they prefer to know the utility from the direct selling agent.

(>50%)

H1: (P>0.5)

Observed value – Expected value Z= ------------------------------------------------------- S.E.

Expected value 0.5(P)Observed value = 61/100 =0.61(Q) = 1-0.5 = 0.5

S.E.(Standard error) = √PQ/n [n=sample size] =√0.5∗ 0.5/100

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= 0.05

Z = (0.61- 0.5)/ 0.05 = 2.2

At 5% level of significance z= 1.645As z=2.2, so, we reject the null hypothesis and accept the alternative hypothesis i.e. more than 50% of people are accepting that they prefer to know the utility from the direct selling agent.

4. H0 = proportion of the people are accepting that they prefer to get

commissions for using a product is 50%

H0 : (P = 0.5)

H1 = More than 50% of people are accepting that they prefer to get

commissions for using a product (>50%)

H1: (P>0.5)

Observed value – Expected value Z= ------------------------------------------------------- S.E.

Expected value 0.5(P)Observed value = 79/100 =0.79(Q) = 1-0.5 = 0.5

S.E.(Standard error) = √PQ/n [n=sample size] =√0.5∗ 0.5/100

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= 0.05

Z = (0.79- 0.5)/ 0.05 = 5.8

At 5% level of significance z= 1.645As z=5.8, so, we reject the null hypothesis and accept the alternative hypothesis i.e. more than 50% of people are accepting that they prefer to get commissions for using a product.

5. H0 = proportion of the people are accepting that they prefer to buy

medium quality products at cheap price is 50%

H0 : (P = 0.5)

H1 = More than 50% of people are accepting that they prefer to buy

medium quality products at cheap price (>50%)

H1: (P>0.5)

Observed value – Expected value Z= ------------------------------------------------------- S.E.

Expected value 0.5(P)Observed value = 67/100 =0.67(Q) = 1-0.5 = 0.5

S.E.(Standard error) = √PQ/n [n=sample size] =√0.5∗ 0.5/100 = 0.05

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Z = (0.67- 0.5)/ 0.05 = 3.4

At 5% level of significance z= 1.645As z=3.4, so, we reject the null hypothesis and accept the alternative hypothesis i.e. more than 50% of people are accepting that they prefer to get commissions for using a product.

6. H0 = proportion of the people are accepting that they prefer to use products only if given a commission is 50%

H0 : (P = 0.5)

H1 = Less than 50% of people are accepting the fact that they prefer to

use products only if given a commission (<50%)

H1: (P<0.5)

Observed value – Expected value

Z= -------------------------------------------------------

S.E.

Expected value 0.5(P)

Observed value = 29/100 =0.29

(Q) = 1-0.5 = 0.5

S.E.(Standard error) = √PQ/n [n=sample size]

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=√0.5∗ 0.5/100

= 0.05

Z = (0.29- 0.5)/ 0.05 = -4.2

At 5% level of significance z= - 1.645

As z= - 4.2, so, we reject the null hypothesis and accept the alternative hypothesis i.e.less than 50% of people are accepting that they prefer to use products only if given a commission

7. H0 = proportion of the people are accepting that Purchase of a product is not made easier by celebrity endorsements is 50%

H0 : (P = 0.5)

H1 = Less than 50% of people are accepting the fact that Purchase of a

product is not made easier by celebrity endorsements (<50%)

H1: (P<0.5)

Observed value – Expected value

Z= -------------------------------------------------------

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S.E.

Expected value 0.5(P)

Observed value = 37/100 =0.37

(Q) = 1-0.5 = 0.5

S.E.(Standard error) = √PQ/n [n=sample size]

=√0.5∗ 0.5/100

= 0.05

Z = (0.37- 0.5)/ 0.05 = -4.2

At 5% level of significance z= - 1.645

As z= - 2.6, so, we reject the null hypothesis and accept the alternative hypothesis i.e. less than 50% of people are accepting that Purchase of a product is not made easier by celebrity endorsements

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Findings and suggestions

From the set hypothesis the following had been found:8a. Total sample 100 Yes 74

yes

no

So, we can say that 74% people prefer to receive extensive training programme about product utility before using it.

8b. Total sample 100 Yes94

yes

no

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So, we can say that94% of people is accepting that they prefer to buy products from nearest kirana shop/ retail outlet. They do not prefer to go direct sales agent and this is the reason today also HUL is more popular than AMWAY in spite of delivering better quality product.

8c. Total sample 100 Yes61

yes

no

So, we can say that 61% of people are accepting that they prefer to know the utility from the direct selling agent. They are of this idea that a direct selling agent will know the nitty-gritty of product usage specially technical product better than simple retailer. They are not expert in this way.

8d. Total sample 100 Yes79

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yes

no

So, we can say that79% of people is accepting that they prefer to get commissions for using a product.

8e. Total sample 100

Yes67

yes

no

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So, we can say that 67% they prefer to they prefer to buy medium quality products at cheap price. This is also the reason for HUL getting more leverage than AMWAY, because sometimes people are sacrificing the excellent quality for cheaper price.

8f. Total sample 100

Yes29

yes

no

So, we can say that 29% they prefer to they prefer to use products only if given a commission/ scheme/ discount. People buy product especially FMCG for their need. So the commission or discount does not motivate them to buy product, but for impulse buying this factor do help to increase the sale.

8g. Total sample 100

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Yes37

yes

no

So, we can say that37% of people is accepting that Purchase of a product is not made easier by celebrity endorsements. People buy product especially FMCG for their need .Celebrity endorsement cannot help them to buy more product; it can enhance the instinct but also to a certain extent.

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Recommendation

The project with the charts and calculation had told that the perception of people about channel marketing is more convincing than the same of direct marketing. If a person buys a product from the local sore he already has a good rapport with the person, so if he faces any problem he believes that he will get more help from that shop .people are interested to know about the product usage and they want to know this from the direct selling agent because they think that the direct selling agent are with direct link with the company, so the customers consider them as more liable.

According to the report 74% people want to get training before using any technical product or general product like medicine, beauty care etc. So, companies should give more emphasis on this matter.

Maximum sample told that they want to buy product from nearest kirana shop. So, companies like AMWAY etc should communicate the value of the product and benefit to the customers most so that they will become aware of the product and the added value. As they do not have proper information they prefer medium quality product also in cheap price.

The direct channel marketer should give more emphasis on the number of agents and their availability. If customers feel the agents of direct

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selling product also as available as kirana store they may change their preference.

As the research shows that customers wants to proper information from the direct selling agent, so if the company give extraneous training to the agents that will obviously help to serve the customer in better way .

The project also says that people are buying product when more commissions or discounts are given. So, if companies can focus on this aspect that again enhances its profitability. But it again incurs more cost. Then if the company can identify any sphere where it can make cost-cutting and invest that money for giving more offers it surely helps to ensure profitability for the company.

The research tells that customers do not have the belief that only celebrity endorsement can help them to buy a product. A product mainly sells for its quality. So, the excessive money of advertisement can be invested for the quality improvement of the product and giving some added benefit to the customers.

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Appendices

Name:…………………………………………………………………….Age: …………………………(years)Gender:…………………….

1. Do you use HUL* or Amway products? YES [ ] NO [ ]

2. Which company’s goods suits your likings more?

HUL [ ] Amway[ ]

3. Which company’s PRODUCT do you think is better? HUL [ ] Amway [ ]

4. Which company’s PROMOTIONAL strategy do you think is better? HUL [ ] Amway [ ]

5. Which company’s PRICING strategy do you think is better? HUL [ ] Amway [ ]

6. Which company’s products you get it anywhere easily? HUL [ ] Amway [ ]

7. Keeping ALL the parameters same which company’s goods will you buy? HUL [ ] Amway [ ]

8. Please mark your preferences: [ ]

(a) I prefer to receive extensive training programme about product utility before using it. YES [ ] NO [ ] (b) I prefer to buy products from: [ ] Nearest kirana shop/ retail outlet. [ ] Direct selling agent. (c) Prefer to know the utility from: [ ] Direct selling agent. [ ] Advertisements. (d) I prefer getting commissions for using a product. YES [ ] NO [ ]

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(e) Ready to buy. [ ] Medium quality products at cheap price. [ ] Only high quality products irrespective of price.

(f) Prefer to use products: [ ] Only if given a commission. [ ] Just to serve my purpose.

(g) Purchase of a product is made easier by celebrity endorsements. YES [ ] NO [ ]

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References

Article:Multi channel Consumer Perception – authored by Maximilian Teltzrow

Internet :http://wps.pearsoned.com.au/au_be_schiffman_consbehav_3/0,10002,1793222-,00.htmlhttp://en.wikipedia.org/wiki/Direct_marketinghttp://www.direct-marketing.net/http://en.wikipedia.org/wiki/Distribution_(business)www.csulb.edu/journals/jecr/issues/20071/paper2.pdf

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Glossary

Channel Marketing - Active management of a sales channel from a marketing perspective, with the aim of making that channel attractive, customer friendly and efficient. Meaning: marketing communication, product marketing and e.g. buying incentives.

Direct Marketing – Direct marketing is a sub-discipline and type of marketing. There are two main definitional characteristics which distinguish it from other types of marketing. The first is that it attempts to send its messages directly to consumers, without the use of intervening media. This involves commercial communication (direct mail, e-mail, and telemarketing) with consumers or businesses, usually unsolicited. The second characteristic is that it is focused on driving purchases that can be attributed to a specific "call-to-action." This aspect of direct marketing involves an emphasis on traceable, measurable positive (but not negative) responses from consumers (known simply as "response" in the industry) regardless of medium.

Multi channel marketing system - a system in which a producer uses more that one channel of distribution.

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