Growth and Benefits of Direct Marketing
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. Direct marketing helps in building a long-term relationship with the customers. Direct marketers occasionally send birthday greeting cards, marriage anniversary greeting cards and Diwali/New year Greeting cards etc. to select number of customers.
Direct marketing channels such as catalogs, direct mail and telemarketing are showing prominence in the recent times. Home shopping is being preferred more and more due to lack of time, inconvenience of family members going out together for shopping, and high cost of transportation etc. Moreover, consumers would feel delighted to avail the marketers’ toll-free phone numbers available day and night for direct shopping.
The growth of affordable computer power and customer databases has enabled direct marketers to single out the best prospects for any product they weigh to sell. Increasingly, business marketers have turned to direct marketing such as telemarketing in response to the high and increasing costs of reaching business markets through the sales force.
Electronic communication is showing explosive growth and the internet traffic is growing at the fastest rate. McKinsey and Company, the world-renowned management consultant had estimated that in the beginning of the new millennium the e-commerce sales would be over $300 billion. Electronic markets are sponsored web sites that describe products and services offered by sellers, allow consumers to search for information, and place orders with the help of a credit or debit card.
- It can be used to directly elicit order for sales. Products can be delivered (for instance, exercise equipment), or they can be mailed to the customer (for instance, magazine subscriptions).
- It can be used to invite further queries about the product and its features, usually by using toll-free numbers.
- It also allows customers to fix up appointments with companies for free product demonstrations according to their convenience.
- Salespeople can be asked to follow up with those customers who have initiated queries. Therefore, it helps to generate leads.
Formats such as teleshopping networks and infomercials (provides detail product information) in direct response television marketing combines the benefits of traditional advertising with effective measurement of response rates.
For small firms, direct response marketing using print media may be the only viable option because of lower costs involved (as compared to catalogue marketing, direct mailers or even telemarketing).
Direct responses are initiated by the customer, and hence, conversion rates are higher as compared to telemarketing and direct mailers.
Direct response television marketing provides an opportunity to show product demonstrations to customers, though it is expensive.
Business to business direct marketing:
Business to business marketers uses direct marketing to sell their offerings to organizational buyers rather than individual consumers. Business to business transactions typically have a longer sales cycle. Sales in business markets take place over a longer period of time as compared to consumer markets.
Therefore, the most important role of direct marketing in business to business transactions is to support personal selling. Visits by sales people may be preceded by telemarketing or use of direct response advertising or direct mailers to generate some leads.
Differences between consumer and business markets result in differences in the role and execution of direct marketing campaigns in these markets.
- Organizational buying involves multiple purchasing roles played by various members or groups in an organization. For instance, purchase of heavy equipment may involve the R&D, purchasing, manufacturing, finance and marketing departments playing different roles.
Members of each of these departments may want different type of information, and hence, a single mailer may not be useful in such a case. A single mailer containing all the desired information will be unnecessary for others, and a different mailer for each group will be expensive, though more effective.
5 Main Reasons for Growth in Direct Marketing Activity are as follows:
Direct marketing attempts to acquire and retain customers by contacting them without the use of intermediaries.
Direct marketing is the distribution of products, information and promotional benefits to members of the target market through interactive communication vehicles in a manner that allows customer response to be measured.
The objective of direct marketing is to achieve a direct response from the customer, which may take the following forms:
- Purchase over telephone or by post (mail) or via the internet.
- A request for catalogue or sales literature.
- A request for product demonstration.
- A request for a salesman’s visit.
Direct marketing techniques have experienced growth due to several reasons:
Reasons for Growth in Direct Marketing Activity
- Market fragmentation has limited the applicability of mass marketing techniques. Increased fragmentation has lead to the emergence of segments that are smaller in size. Such consumer segments have finer, distinct sets of needs which may not be fulfilled by the current offering of the marketer. Therefore, the capability of direct marketing techniques to target distinct consumer groups is of increasing importance.
- The increasing supply of lists and their diversity has provided raw data for direct marketing activities. There is large amount of transaction data available with retailers and internet marketing companies that can be used to target individual customers more accurately.
- Sophisticated software allows generation of personalized letters, messages and offerings.
- Sophisticated analytical tools are available now that help companies to classify and understand customers better. Households can be classified into types of neighbourhoods by using geodemographic analysis. For example, neighbourhoods of elderly people, or private houses or single people can be identified. These in turn can be cross-referenced with product usage, media usage and lifestyle segments.
- High cost of personal selling have led companies to take advantage of direct marketing techniques such as direct response advertising and telemarketing to make the sales force more effective. Direct marketing techniques generate leads that can be screened by outbound or inbound telemarketing.