1.2.2. Direct Marketing

Direct marketing was traditionally considered a specialty form of marketing and advertising appropriate only for products and services offered by, for example, book publishers, record clubs, correspondence schools, and marketers of inexpensive gadgets and cheap clothing. Today, however, most Fortune 500 firms now are enthusiastic users of database marketing and/or direct marketing. Indeed, direct marketing is one of the growth areas in business.

Precisely what is direct marketing? The Direct Marketing Association, a trade group whose members practice various forms of direct marketing, offers the following definition:

Direct marketing is an interactive system of marketing which uses one or more advertising media to effect a measurable response and/ or transaction at any location. Note the special features of this definition. First, direct marketing involves interactive marketing in that it entails personalized communications between marketer and prospect. Second, direct marketing is not restricted to just direct mail but rather involves one or more media (e.g., direct mail with telephone marketing). Third, marketing via media such as direct mail allows for relatively greater measurability of response in comparison to indirect media such as television advertising. Greater measurability is possible because purchase responses to direct marketing

1) typically are more immediate that responses to mass-media advertising and

2) can be tracked to specific customers. Finally, direct marketing takes place at a variety of locations - by phone, at a kiosk, by mail, or by personal visits.

You now have a general understanding of direct marketing; however, the terminology of direct marketing can be confusing because the word direct is used in several different ways: direct marketing, direct selling, direct-response advertising, and direct mail. The total marketing process consists of indirect and direct marketing and delineates the latter into its various forms.

Indirect marketing includes the use of intermediaries in the channel of distribution; examples include distributors or dealers in industrial-goods marketing and retailers in consumer-goods marketing. Indirect marketing is what typically comes to mind when one thinks of marketing.

With direct marketing the marketer’s purpose is to establish a direct relationship with a customer in order to initiate immediate and measurable responses. Direct marketing is accomplished using direct-response advertising, direct mail (including catalogs), telemarketing, and direct selling.

Direct-response advertising involves the use of any of several media to transmit messages that encourage buyers to purchase directly from the advertiser. Several main channels of direct marketing exist in the world marketing practice.

The most common form of direct marketing is direct mail used by advertisers who send paper mail to all postal customers in an area or to all customers on a list. Direct mail allows producers to get information about products and services directly into the hands of people who may be interested in it. Though it's often considered as junk mail, it can be highly effective in both business and consumer markets if it's properly planned and researched. As well as a mailing letter, a range of enclosures such as a product brochure, order-form, catalogs, free trial CDs and pre-paid reply envelope are typically included and delivered by mail or to homes and businesses, or to consumers' mailboxes. The other key ingredient for a successful direct-mail campaign is a high-quality mailing list. The most effective lists are those from a well-managed database – the producer will know the preferences of the recipients of his mail shot and can tailor his offer accordingly. That database analysis helps to select recipients who are considered most likely to respond positively.

E-mail is an extremely cheap form of direct marketing - a message can be sent to thousands of recipients for next to nothing. It's also the easiest way to target the exact person you need to reach. Measuring response rates is simple and recent figures show that they are higher than those for mail shots. However, there are disadvantages, too. E-mail contacts go out of date faster than either addresses or telephone numbers, so the marketers need to be particularly active in cleaning the company’s database. And the increasing amount of spam means that marketing e-mails will need to stand out if they aren't to be deleted before being read. Increasingly sophisticated anti-spam software also means that many marketing e-mails are deleted before they arrive at their destination. It’s essential to remember that using e-mail marketers must comply with certain legal requirements when sending marketing e-mails to potential or existing customers.

The second most common form of direct marketing is telemarketing, in which marketers contact consumers by phone. Contacting consumers by telephone can offer a number of advantages over other forms of marketing. It allows to:

• know the customer's interest immediately;

• ask questions to recognize the customer's needs;

• explain technical or complex messages more effectively.

But there is a significant disadvantage: many people find marketing calls an unwelcome interruption. So it’s important not to be pushy.

Fax marketing has become less popular with the increasing use of e-mail marketing campaigns. Recipients of unsolicited faxes are likely to consider them as an irritant which uses up paper.

Direct Selling is the sale of a consumer product or service, person-to-person, away from a fixed retail location. These products and services are marketed to customers by independent salespeople. Depending on the company, the salespeople may be called distributors, representatives, consultants or various other titles. Products are sold primarily through in-home product demonstrations, parties and one-on-one selling.

Couponing is used in print media to get a response from the reader. An example is a coupon which the reader cuts out and presents to a supermarket check-out counter to get a discount. Coupons in newspapers and magazines cannot be considered direct marketing, since the marketer incurs the cost of supporting a third-party medium (the newspaper or magazine); direct marketing aims to save that balance, cutting the costs down to solely delivering their unsolicited sales message to the consumer, without supporting the newspaper that the consumer seeks.

Leafleting is probably the simplest and cheapest form of direct marketing. It may be worth considering unaddressed leaflet drops if producer wants to promote his business in his local area, particularly to consumers. However, leafleting brings significantly lower response rates than direct mail. It's less targeted the characteristics of the recipients are not known and the message can’t be personalized. As a result it's often best to use leaflets for products or services of universal appeal. If the manufacturer wants a return his investment, he needs to prepare the materials carefully: ensure materials look professional and contain clear, useful information. Leaflet Distribution services are used extensively by the fast food industries, and many other businesses focusing on a local catchment. To find out how effective the campaign has been, it's a good idea to include some kind of incentive for feedback like a discount or a special offer.

Finally, we need to introduce the practice of database marketing. Database marketing (DBM), which is used both by indirect and direct marketers, involves collecting and electronically storing (in a database) information about present, past, and prospective customers. Typical databases include purchase data and other types of relevant customer information (demographic, geographic, and psychographic). The information is used to profile customers and to develop effective and efficient marketing programs by communicating with individual customers and by establishing long-term communication relationships.

Although database marketing and direct marketing are not equivalent, the increased sophistication of database marketing has been largely responsible for the growing use and effectiveness of direct marketing. Moreover, indirect marketers also have increased their use of database marketing.

It’s possible to use direct marketing in both business-to-business and consumer markets. Of course, the strategy will need to be modified depending on the targeting. While business contacts are used for receiving marketing e-mails, consumers may be less receptive to mail shots or telemarketing calls - so it’s necessary to plan your approach carefully.

A direct marketing campaign can help you to achieve the following key objectives:

• increasing sales to existing customers;

• building customer loyalty;

• re-establishing collapsed customer relationships;

• generating new business.

Careful preparation of direct-marketing campaigns is essential if it’s important to make the most of the investments, get the response rates wanted and ensure not contacting individuals who have decided they do not want to receive direct marketing mailings. So, the results of direct marketing aren't guaranteed. A poorly planned or targeted campaign will be a waste of money. A badly designed mail shot can simply end up in the bin. And what is more, it may irritate recipients and damage business' reputation as a result. In addition, the media channel should be chosen carefully because the channel has a significant effect on the creative message that is delivered. Different channels have an impact on the way of communication, the specific message being delivered and also the opportunity for consumers to respond.