Direct Marketing and Sales Promotion
Direct marketing is a form of advertising where organizations communicate directly to customers through a variety of media including cell phone text messaging, email, websites, online adverts, database marketing, fliers, catalogue distribution, promotional letters and targeted television, newspaper and magazine advertisements as well as outdoor advertising. Among practitioners, it is also known as direct response.
Any product that is sold through the market goes through an elaborate system of production, transportation, procurement at market place and subsequently one or two steps before reaching the end consumer. In the entire value chain, some value is added either in transportation, storage, delivery or product improvement.
How is direct marketing campaign developed?
Effective direct marketing begins with data. Marketers examine categories of customers or prospects they think will be interested in their product or service, and develop or procure lists for making contacts.
Lists can be obtained through public or commercial sources, and may represent all the people in a particular neighbourhood, all the people who entered a contest drawing, all the people who opted in to a newsletter, a customer list from another business, etc. Such lists should not be used indiscriminately; instead, the data should be analyzed to create messages and offers that are likely to be relevant to these customers or prospects.
A direct marketing campaign may use multiple communications channels including mail, e-mail, phones, and face-to-face contact (See also Direct Mail Marketing). Different channels will be selected based on the target group. For example, a new restaurant might prefer distributing flayers or leaflets door to door, which saves money on mailing costs, targets the restaurant’s immediate neighborhood, and provides an opportunity for person-to-person engagement. Face-to-face engagement might also be used for in-store marketing. Home Depot In-Home Services, for instance, uses direct marketers in their stores to generate leads for various home improvement programs, such as cabinet resurfacing.
Figure:- Direct Marketing
Direct marketing channels
The following are the most common forms of direct marketing channels:
- Email marketing
- Online tools
- Voicemail marketing
- Direct mail
- Insert mail
- Direct response marketing
- Direct selling
- Grassroots/community marketing
Advantage of Direct Marketing
(i) Save distribution costs: The major advantage of direct marketing is huge saving on distribution costs. As already stated, it cuts through a clutter of stakeholders before it reaches the customer hence huge savings is effected. This savings can be passed on to the consumers partially or retained by the company for greater investment in products and technologies. Amway, for e.g. claims to distribute the distribution costs saved to independent distributors after keeping a share for themselves.
(ii) Product or service at door steps: The conventional method of selling involves the buyer going to the shop or market place to search for products and selecting them. There is often no way to demonstrate the effectiveness of the product in real life setting. With direct marketing, it is possible to reach the door step of the consumer and give a live demo in real setting and convince the customer effectively to buy a product.
(iii) Environmental Costs: Huge costs on transportation, hoardings, point-of-sale promos can be saved which in turn has impact on carbon foot print and associated environmental costs. The more products come under direct marketing, the lesser would be the logistical costs. Moreover, for the consumer fuel, time savings are effected when product is delivered on premises. No shop space and infrastructure required to develop the brand.
(iv) Independent Salesmen/Distributors to benefit: Direct marketing may have some impact on traditional sales, however, several new professionals looking for independent work and income can benefit by becoming associates of such companies. Or become a network marketing professional.
(v) Understand customer requirement better: Direct marketing companies are in face-to-face contact with the customer and hence in a better position to get product feedback, understand their requirements and fine tune products.
Sales promotion is one of the elements of the promotional mix. (The primary elements in the promotional mix are advertising, personal selling, direct marketing and publicity/public relations). Sales promotion uses both media and non-media marketing communications for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability. Examples include contests, coupons, freebies, loss leaders, point of purchase displays, premiums, prizes, product samples, and rebates.
Sales promotions can be directed at either the customer, sales staff, or distribution channel members (such as retailers). Sales promotions targeted at the consumer are called consumer sales promotions. Sales promotions targeted at retailers and wholesale are called trade sales promotions.
Sales promotion includes several communications activities that attempt to provide added value or incentives to consumers, wholesalers, retailers, or other organizational customers to stimulate immediate sales. These efforts can attempt to stimulate product interest, trial, or purchase. Examples of devices used in sales promotion include coupons, samples, premiums, point-of-purchase (POP) displays, contests, rebates, and sweepstakes.
Sales promotion is implemented to attract new customers, to hold present customers, to counteract competition, and to take advantage of opportunities that are revealed by market research. It is made up of activities, both outside and inside activities, to enhance company sales. Outside sales promotion activities include advertising, publicity, public relations activities, and special sales events. Inside sales promotion activities include window displays, product and promotional material display and promotional programs such as premium awards and contests.
When undertaking a sales promotion, there are several factors that a business must take into account:
- What does the promotion cost – will the resulting sales boost justify the investment?
- Is the sales promotion consistent with the brand image? A promotion that heavily discounts a product with a premium price might do some long-term damage to a brand
- Will the sales promotion attract customers who will continue to buy the product once the promotion ends, or will it simply attract those customers who are always on the look-out for a bargain?
There are many methods of sales promotion, including:
- Money off coupons – customers receive coupons, or cut coupons out of newspapers or a products packaging that enables them to buy the product next time at a reduced price
- Competitions – buying the product will allow the customer to take part in a chance to win a prize.
- Discount vouchers – a voucher (like a money off coupon)
- Free gifts – a free product when buy another product
- Point of sale materials – e.g. posters, display stands – ways of presenting the product in its best way or show the customer that the product is there.
- Loyalty cards – e.g. Nectar and Air Miles; where customers earn points for buying certain goods or shopping at certain retailers – that can later be exchanged for money, goods or other offers.
Loyalty cards have recently become an important form of sales promotion. They encourage the customer to return to the retailer by giving them discounts based on the spending from a previous visit. Loyalty cards can offset the discounts they offer by making more sales and persuading the customer to come back. They also provide information about the shopping habits of customers – where do they shop, when and what do they buy? This is very valuable marketing research and can be used in the planning process for new and existing products.
There are two types of Sales promotions:
(a) Consumer sales promotions
Any sales promotion activity that you do keeping the end consumer in mind is known as consumer sales promotions. Example – if an E-commerce website gives 10% discount on its products, then it wants the consumers to make the best of this deal. This is a consumer focused promotional activity and hence can be called as consumer sales promotions.
The objective of Consumer sales promotions might be various. A consumer might be asked to test a sample of a completely new perfume in the market and rate it. An existing customer might be asked to use a Scratch card so that he receives a gift.
At the end, the result should be an action from the consumer. Either the consumer should purchase the product right away, or he should come to know about the product so that further awareness is created for the brand.
(b) Trade Sales promotions
If your promotional activities are focused on Dealers, distributors or agents, then it is known as trade promotions. There is a lot of competition in any field. And in channel sales, to get the products moving and to motivate the dealer to perform better, trade discounts are given.
Example – You are a dealer for Televisions. Now Sony comes and tells you, you will be given 5% discount if you cross a sale of 100 televisions. Naturally, you will be very motivated because 5% in television sales is huge. Plus selling Sony TV’s is easy because it is already a brand. Thus, you divert all potential customers to Sony Televisions so that you can achieve the target.
Figure: Sales Promotion