Direct Marketing

9th Nov 2013

Welingkar Institute
Direct Marketing

Course overview:

Understanding role of DM.

What is database marketing?

Key concepts.

Overview of 4 cornerstones of DM


Direct Marketing

Course overview:

-Cornerstone 1

Identify your TG/customers. How databases support
this process.


Direct Marketing

Course overview:

- Cornerstone 2
-Differentiate customers
-Overview of segmentation and consumer profiling.
-Review at various periods.
-Direct Marketing Strategies for different value
segments.
-Introduction to analytical techniques.

Direct Marketing

Course overview: contd


- Cornerstone 3
-Interacting with customers
-Loyalty marketing. Offers and incentives.
-Different methods of DM.
-Interacting with customers campaign testing, metrics, dashboard
concepts.
Direct Marketing

Course overview: contd

- Cornerstone 4
Customise
-Mass customisaton of products,
-Communication,
-Relationship marketing


Direct Marketing
Direct Marketing

The purpose of all marketing activities is to reach out
to your customer/consumer and generate the intended
action.

The consumer is to be made aware of your product
and its benefits.

The more sharply you define your consumer, the more
efficient will be your communication campaign.
Direct Marketing

The purpose of DM is also to reach out to your
customer/consumer and generate the intended action.
Direct Marketing

Direct marketing consists of direct connections with carefully
targeted individual consumers to both obtain an immediate
response and cultivate lasting customer relationships

No intermediaries
An element of the promotion mix
Fastest-growing form of marketing
Direct Marketing

Examples of intended action?

Direct Marketing
Intended actions The AIDA Principle

- Attention

- Interest

- Desire

- Action
Direct Marketing
Intended actions

- Consumption - most FMCG products
- Awareness - Environment protection, child labour, hygiene
- Service NGO, Education

-Some thing as simple as leave your card, call back, write back, give a
missed call, send an SMS
Direct Marketing

Commerce started out with direct marketing.

- Artisans would craft their own product and sell directly to
consumers

- Perfumers would blend their brands and sell.

- Weavers would weave and sell their own merchandise.
Direct Marketing

Even today we see direct marketing around us where production is
sold directly to consumer through personalised channel:

- The local milk supplier Doodhwala (especially in small town).

- Most Pizza sellers

- Almost all restaurants depend on direct marketing.

- Specialty stores (Lifestyle, Shoppers stop, Westside)

Direct Marketing

The important point here is that the marketer KNOWS his/her
customers.

The marketer also added information to the data base (Likes,
frequency, choice, etc)

The customer base was captive and sales were made repetitively to
the same customer.

This is also the key to DM

Direct Marketing

As business became more complex and diverse, sales grew and
consumer base increased.

The proximity of manufacturer and consumer decreased. From a local
supplier, who knew most of his/her client by name/face, the consumer
became a faceless entity

Mass availability of product became a pre-requisite, organised distribution
took precedence over direct marketing.

Mass media advertising became the buzzword.


Direct Marketing

However direct selling continued to remain attractive to certain business.

The advent of internet and better technology in communications have
further boosted direct marketing.

The need to remain directly connected with the consumer still runs high
with serious marketers

Thus

Marketing is all about reaching your product or service to the consumer

A typical marking process involves development of the marketing mix
which enables the marketer to reach the consumer.

Direct marketing is all about reaching your consumer directly.

DM therefore is a subset of marketing communication.
For many business it is marketing communication


Direct Marketing
Direct Marketing
Marketing communication (Advertising):

An exercise in communication to drive a target audience to take
the intended action upon the subject of the advertisement.


Communicating the brands positiong to the target audience so
that the audience is most likely to take the desired / intended
action.

Definition

In its simplest form DM is marketing which seeks immediate
response.
The response may be to:
- Place an order.
- Ask for more information
- Send an application
- Leave an address
- Make a phone call or
- Visit an address

Having identified a customer or a potential customer the focus
should be on generating action.
Direct Marketing

Definition contd..

Bob Stone the innovator of DM says
Underlying all DM success is the ability to trigger direct action, a
measurable action at the right cost


Direct Marketing

Direct marketing does not involve the traditional routes to market.
No distributors, wholesalers or even mass retail availability.


The deal is done directly between manufacturer and the consumer


Direct Marketing

Direct marketing is also referred to as:

- One to One marketing

- Database marketing.

One to one marketing is more apt.


Direct Marketing
Direct Marketing
Conventional Route to consumer
Factory
C&FA [In every state] 1.5 % 2%

Stockist [Every town] 5% - 7%
Retailer Marginal/Rural retailer 8% - 10%
Wholesaler 8% - 10%
Consumer
Super markets
[MTOs] 20%
Cos sale
Stockists sale
Direct Marketing
Direct Route to consumer
Producer
Consumer
Direct Marketing
Direct Marketing Conventional Marketing
Builds direct customer response

Measurable direct response


DM is accountable and can be
tracked.

Builds product imagery and positioning

Response cannot be directly attributed


Other factors like availability, campaign
OTS, POS display, ad recall play imp role
in sale conversion

Tools of Direct Marketing.
Some of the DM methods are:

1. Personal selling direct marketing
2. Direct-mail direct marketing
3. Catalog direct marketing
4. Telephone marketing
5. Direct-response television marketing
6. Kiosk marketing
7. Digital direct marketing
8. Online marketing
Direct Marketing
The advent of Internet and better communication technology
has revived the marketers interest and usage of direct marketing

DM is becoming one of the fastest growing segments of advertising
and communication.

However much of DRA (direct response advertising) is ineffective
because it is not conducted properly.

DM contains contradictions. It combines simple concepts with
complex executions.

DM is often misunderstood and myths are common.
Direct Marketing
Myths of DM.
1) Direct mail is junk mail
It is non intrusive (unlike a phone of TVC)
Most people glance to see if there is any offer

2) DM is good only for mail order firms.
You have to identify the consumer carefully and then follow on. It
can be really profitable to do so. Amway, Tupperware etc testify
this.

3) DM is not appropriate for big ticket firms One will be surprised by
the number of offer by invitation only high end products that are
marketed.
Direct Marketing
Myths of DM
4) Response rates are low: Ask a high end builder on the outcome of
a prime property on invitation only sale.

5) Try out a hundred leaflets / mails a recipe for disaster. If DM TG is
not carefully planned and charted it will fail, as in any other
campaign
Direct Marketing
Database marketing
Direct Marketing
Database marketing

As mentioned earlier, direct marketing is also known as
database marketing.

The key to successful DM is having a well defined
customer/consumer list or data base

Just as a marketer will profile the consumer of her brand,
so will a direct marketer profile her consumers!

HUL markets DOVE and Breeze. Both brands have
different consumer profiles, hence communication mix
will also be different

Direct Marketing
Direct Marketing
Customer Database

Customer database is an organized collection of comprehensive
data about individual customers or prospects, including
geographic, demographic, psychographic, and behavioral data
Database marketing

Database is collection of information on customers and prospective
customers that include:
- Name & address
- Titles
- Companies
- Buying histories
- Incomes
- Buying patterns
- Lifestyles.

Thus the database has to be continuously refined and updated.
Direct Marketing
Database marketing

Uses:
Locate good and potential customers
Generate sales leads
Learn about customers
Develop strong long-term relationships

Direct Marketing
Database marketing

Once the database is developed, products can be chosen to fit the
database.

Thus having a sound and continually updated database is a key
success factor for DM
Direct Marketing
Database marketing

Citibank makes its database of credit card owners available to
marketers at a cost.
It will segment the database based on marketers requirement.

Timesjobs.com also offers its database for direct selling

Like wise there are other database available.
Direct Marketing
Examples of successful DM
Amway
Tupperware
Flipkart
Avlon
Tickets
eBay
Telebrands
Direct Marketing
Forms of Direct Marketing
Direct Marketing
Forms of DM

Personal selling direct marketing
Direct-mail direct marketing
Catalog direct marketing
Telephone marketing
Direct-response television marketing
Kiosk marketing
Digital direct marketing
Online marketing
Direct Marketing
Forms of DM

Direct-mail marketing involves an offer, announcement, reminder, or
other item to a person at a particular address

Personalized
Easy-to-measure results
Costs more than mass media
Provides better results than mass media
17-10
Direct Marketing
Benefits of Web-based catalogs
Lower cost than printed
catalogs
Unlimited amount of
merchandise
Real-time merchandising
Interactive content
Promotional features
Challenges of Web-based
catalogs
Require marketing
Difficulties in attracting new
customers

17-11
Catalogue DM involves printed and Web-based catalogues
Forms of DM
Direct Marketing

Telephone DM: involves using the telephone to sell directly to
consumers and business customers

Outbound telephone marketing sells directly to consumers and
businesses
Inbound telephone marketing uses toll-free numbers to receive
orders from television and print ads, direct mail, and catalogs
17-12
Forms of DM
Direct Marketing
Benefits of telephone direct
marketing
Purchasing convenience
Increased product service
and information
Challenges of telephone DM
Unsolicited outbound
telephone marketing
Do-Not-Call Registry
17-13
Forms of DM
Telephone DM: contd..
Direct Marketing

Direct-response television (DRTV) marketing involves 60- to 120-
second advertisements that describe products or give customers a
toll-free number or Web site to purchase and 30-minute
infomercials such as home shopping channels

Less expensive than other forms of promotion
Easier to track results
17-14
Forms of DM
Direct Marketing

Kiosk marketing involves placing information and ordering machines
in stores, airports, trade shows, and other locations
17-15
Forms of DM
Direct Marketing

Digital direct marketing technologies
Mobile phone marketing
Podcasts
Vodcasts
Interactive TV
17-16
Forms of DM
Direct Marketing

Mobile phone marketing includes:
Ring-tone giveaways
Mobile games
Ad-supported content
Contests and sweepstakes
17-17
Forms of DM
Direct Marketing

Podcasts and Vodcasts involve the downloading of audio and video
files via the Internet to a handheld device such as an iPod and
listening to them at the consumers convenience
17-18
Forms of DM
Direct Marketing

Interactive TV (ITV) lets viewers interact with television programming
and advertising using their remote controls and provides marketers
with an interactive and involving means to reach targeted
audiences
17-19
Forms of DM
Direct Marketing
Benefits of DM?

Benefit to consumers
Benefit to business
Direct Marketing
Benefit to consumers

Convenience
Ready access to many products
Access to comparative information about
companies, products, and competitors
Interactive and immediate
Direct Marketing
Benefit to sellers

Tool to build customer relationships
Low-cost, efficient, fast alternative to reach markets
Flexible
Access to buyers not reachable through other
channels
Direct Marketing
How does DM benefit business?

- There is control: The medium and the message and
the contents can be completely controlled.
You can send any kind of inserts!

- There is usually no other competition in the mailbox
no competing ads on same page

- Precise targeting allows search for specific prospects.
Mailers only for Drs, engineers, children

- DM is immediate and personal

Direct Marketing
How does DM benefit business?

- Several goals can be accomplished
communicate about product and offer promotions and get immediate response

- Ideal mode for product testing
Choose a small data base and get consumer feedback on new products!

- Data base can be used for different products for same customer
profile
Drs can be approached for different products.

- You can resell to your customers repeatedly.

- Continually build and refine the database

Direct Marketing
OPEN SESSION
Direct Marketing