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Archive for the ‘Marketing Management’ category

Public and Ethical Issues in Direct Marketing (33) Views

Jun 21st
by admin |
in Direct Marketing, Marketing Management
( 0 )

Direct marketers and their customers usually enjoy mutually rewarding relationships. Occasionally, however, a darker side emerges:

Irritation:

Many people find the increasing number of hard-sell direct-marketing solicitations to be a nuisance. They dislike direct-response TV commercials that are too loud, too long and too insistent. Especially, bothersome are dinnertime or late-night phone calls, poorly trained callers and computerized calls placed by an auto-dial recorded-message player.

Unfairness:

Some direct marketers take advantage of impulsive or less sophisticated buyers. TV shopping shows and infomercials may be the worst culprits. They feature smooth-talking hosts, elaborately staged demonstrations, claims of drastic price reductions, “while they last” time limitations, and unexcelled ease of purchase to capture buyers who have low sales resistance.

Deception and fraud:

Some direct marketers’ design mailers and write copy intended to mislead buyers. They may exaggerate product size, performance claims, or the “retail price.” Political fundraisers sometimes use gimmicks such as “look-alike” envelopes that resemble official documents, simulated newspaper clippings, and fake honors and awards. Some nonprofit organizations pretend to be conducting research surveys when they are actually asking leading questions to identify donors. The Federal Trade Commission receives thousands of complaints each year about fraudulent investment scams or phony charities. By the time the buyers realize they have been biked and alert the authorities, the thieves have fled to another location.

Invasion of privacy:

It seems that almost every time consumers order products by mail or telephone, enter a sweepstakes, apply for a credit card, or take out a magazine subscription, their names, addresses, and purchasing behavior may be added to several company databases. Critics worry that marketers may know too much about consumer’s lives, and that they may use this knowledge to take unfair advantage. Should AT&T be allowed to sell marketers the names of consumers who frequently call catalog companies 800 numbers? Is it right for credit bureaus to compile and sell lists of people who have recently applied for credit cards? Is it right for states to sell the names and addresses of driver’s license holders, along with height, weight, and gender information, allowing apparel retailers to target people with special clothing offers?

People in the direct-marketing industry are attempting to address these issues. They know that, left untended, such problems will lead to increasingly negative consumer attitudes, lower response rates, and calls for greater state and federal regulation. In the final analysis, most direct marketers want the same thing that consumers want: honest and well-designed marketing offers targeted only to those consumers who appreciate hearing about the offer.

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Major Decisions in Direct Marketing (46) Views

Jun 21st
by admin |
in Direct Marketing, Marketing Management
( 0 )

In preparing a direct-marketing campaign, marketers must decide on their objectives, targets, offer strategy, various tests, and measures of campaign success. Here we will review these decisions.

Objectives:

The direct marketer normally aims to secure immediate purchases from prospects. The campaign success is judged by the response rate. A response rate of 2% is normally considered good in direct marketing sales campaign. Yet this rate also implies that 98% of the campaign effort was wasted.

That is not necessarily the case. The direct marketing presumably had some effect on awareness and intention to buy at a later date. Furthermore, not all direct marketing aims to produce an immediate sale. One major use of direct marketing is to produce prospects leads for the sales force. Direct marketers also send communication to strengthen brand image and company preference; examples include banks that mail birthday greetings to their best customers. Some direct marketers run campaign to inform and educate their customers to prepare them for later purchases; thus Ford send out booklets on “How to take Good Care of your Car”. Given the variety of direct marketing objectives, the direct marketer needs to carefully spell out the campaign objectives.

Target customers:

Direct marketer needs to figure out the characteristics of customers and prospects who would be most able, willing, and ready to buy. Bob stone recommends applying the R-F-M formula    ( recency, frequency, monetary amount) for rating and selecting customers from a list. The best customers target who bought most recently, who buy frequently and who spend the most. Points are established for varying R-F-M levels, and each customer is scored; the higher the score, the more attractive the customer.

Direct marketers can use segmentation criteria in targeting prospects. Good prospects can be identifies on the basis of such variables as age, sex, income, education, previous mail-order purchases, and so forth. Occasions also provide a good segmentation departure points. New mothers will be in the market for baby clothes and baby toys; college freshmen will buy computers and clothing and newly married will be looking for housing, furniture, appliances and bank loans. Another good segmentation departure points are consumer lifestyles. There are consumers who are marketers have targeted these groups and won their hears and minds. Companies and industries 24-1 provides the survey findings of Japanese consumer who tended to purchases through direct mail.

Once the target market is defined, the direct marketer needs to obtain names of good prospects in the target market. Here is where list acquisition and management skills come into play. The direct marketer’s best list is typically the house list of past customers who have bought the company’s products. The direct marketers can buy additional lists from list brokers. Manes on these lists are priced at so much a name. But external lists have problems, including name duplication, incomplete data, obsolete addresses, and so on. The better lists include overlays of demographic and psycho graphic information, in addition to simple addresses. The main point is that the direct marketer needs to test in advance to know their worth. Read more…

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Products More Suitable For Direct Marketing (41) Views

Jun 21st
by admin |
in Direct Marketing, Marketing Management
( 0 )

Industrial goods are traditionally sold through the company’s own sales force. In case of high-value Industrial products, such as machines, equipments, high-tech engineering goods, and projects where long-term standing in the market and one-to-one relationship with the customers are both important, direct marketing may produce better results as compared to other approach.  Madras based medium sized engineering firm, RKKR Steels has demonstrated that even construction grade steel products (such as bars, angles and frames) can be marketed directly to builders, contractors and individual buyers.

Services come next in the list of favorites for direct marketing. In service oriented business, retaining the customers and getting repeat business is critical for the success of any venture. Perhaps because of this an ever-increasing number of foreign and private sector banks, hotels, airlines, corporate hospitals, health clubs and couriers firms are now banking more on direct marketing. Individual approach, as used in direct marketing helps in creating customer loyalty, the backbone of service organization. In India, firms like ANZ Grindlays bank, DHL Worldwide, ITC Hotels, NEPC Airlines and many more have benefited immensely by direct marketing during the last couple of years.

Direct approach is also being used extensively in the marketing of financial products such as new issues of share, fixed deposits schemes and mutual funds. Real estates and plantation firms like Anasal’s properties, sterling Holiday resorts, Anubhav Plantation, teak Equity and many more have been making the most of direct marketing. Nevertheless, direct marketing is Viable only if the margins in the business are high enough to absorb the cost of maintaining regular contract with customers; otherwise it may turn out to be a losing proposition.

The next category of products suitable fro direct marketing is high value, high involvement consumer products such as expensive cars, jewellery, designer watcher and furniture, some specialty products that have a small customer base, such as medical equipment, health care products and special application gadgets may also be marketed by making direct contract with prospects. Read more…

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Factors Contributing to the Growth of Direct Marketing in India (83) Views

Jun 21st
by admin |
in Direct Marketing, Marketing Management
( 0 )

In the international market direct marketing has evolved through the catalogue route. It was the catalogue marketer of the 1930s who set the pace, but it took direct marketing several decades to reach its present-day multimedia, interactive modes status. In India, direct marketing was launched on the mail-order platform in the 1950s.but the growth in the earlier days was sluggish and the practice was confined to only a product categories. Most major developments in this area took place only after the consumer boom in the mid 1980s.

Direct marketing in India has since grown by leaps and bounds. With the advent of competition in the 1990s, several firms such as Philips, Telco, Titan and BPL who were earlier marketing their product through conventional channels only are now turning to direct marketing to strengthen their marketing efforts and increase their consumer base. They are integrating direct marketing with conventional distribution to get closer to their customer.

The following major factors have contributed to the quick growth of direct marketing in India:

Successful replication of overseas products and marketing practices in India.

Eureka Forbes made history of sorts in India by successfully marketing vacuum cleaners through door-to door selling. The firm had, in fact not done anything new. It had only been replicating here the strategy, which was earlier used in the European markets quite successfully. Nevertheless, its success in India provided a role model for other firms to emulate.

Change in the Indian business environment due to liberalization

Some major changes in the Indian business environment, especially after 1991, made the domestic markets for many consumer and industrial products more competitive. For the first time, several business firms that were well entrenched in their markets felt the heat of competition. It was now essential for them to get closer to the customers to protect their markets. Many of them, such as Onida, HMV, BPL and Titan who were selling their products only through agents and middlemen, switched to a parallel channel of direct marketing by opening several exclusive retail shops. The aim was to keep in direct touch with the customers and provide certain services that were not being provided by the middlemen.

Another objective of opening exclusive showrooms was to build an up-market image of the company by demonstrating the full range of products. The ambience and décor of the exclusive showrooms also helped these firms in adding value to their brands. LML Vespa, Liberty shoes, Bausch& Lomb eye care products and several others ventured into direct retailing probably due to this reason alone. Service firms such as ITC Hotels and ANZ Grindlays Bank found direct marketing very effective in retailing customers and weathering competition. Read more…

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The Benefits of Direct Marketing (26) Views

Jun 21st
by admin |
in Direct Marketing, Marketing Management
( 0 )

Direct marketing benefits customers in many ways. Home shopping is fun, convenient, and hassle-free. It saves time and introduces consumers to a larger selection of merchandise. They can do comparative shopping by browsing through mail catalogs and on-line shopping services. They can order goods for themselves or others. Business customer also benefits by learning about available products and services without trying up time in meeting sales people.

Sellers also benefit. Direct marketers can buy a mailing list containing the names of almost any group: left-handed people, overweight people, and millionaires. They can personalize and customize their messages. According to Pierre Passavant: “We will store hundreds…of messages in memory. We will select ten thousand families with twelve or twenty or fifty specific characteristics and send them very individualized laser-printed letters.” Direct marketers can build a continuous relationship with each customer. The parents of the newborn baby will receive periodic mailings describing new clothes, toys, and other goods as the child grows. Nestlé’s baby food division continuously builds a database of new mothers and mails six personalized packages of gifts and advice at key stages in the baby’s life.

Direct marketing can be timed to reach prospects at the right moment, and direct marketing material receives higher readership because it is sent to more interested prospects. Direct marketing permits the testing of alternative media and messages in search of the most cost-effective approach. Direct marketing also makes the direct marketers offer strategy less visible to competitors, finally, direct marketers can measure responses to their campaigns to decide which have been the most profitable.

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The Growth of Direct Marketing and Electronic Business (29) Views

Jun 21st
by admin |
in Direct Marketing, Marketing Management
( 0 )

Sales produced through traditional direct marketing channels (catalogs, direct mail, and telemarketing) have been growing rapidly. Whereas U.S. retail sales grow around 3 percent annually, catalog and direct-mail sales grew about 7 percent in 1997. These sales include sales to the consumers market as (53%), business-to-business sales (27%), and fund raising by charitable institutions (20%). Sales through catalog and direct mail are estimated at over $3118 billion annually.

Per capita annul direct sales are $630.

The extraordinary growth of direct marketing is the result of many factors. Market “demassification” has resulted in an ever-increasing number of market niches with distinct preferences. Higher costs of driving, traffic congestion, parking headaches, lack of time, a shortage of retail sales help, and queues at checkout counters all encourage at-home shopping. Consumers appreciate direct marketers toll-free phone numbers available 2-hours a day,7days a week, and their commitment to customer service.

The growth of next-day delivery via Federal Express, Airborne, and UPS has made ordering fast and easy. In addition, many chain stores have dropped slower moving specialty items, creating an opportunity for direct marketers to promote these items directly to interested buyers. The growth of affordable computer power and customer databases has enabled direct marketers to single out the best prospects for product they wish to sell. Increasingly, business marketers have turned to direct mail and telemarketing in response to the high and increasing costs of reaching business markets through the sales force.

Electronic communication is showing explosive growth. In 1997 the Internet user population numbered 100 million worldwide, of which 67 million were in the United States. Internet traffic is doubling every 100 days. There are more than 1.5 million web sites. Mckinsey & company estimates that e-commerce sales could grow to $327 billon by the year 2002. the creation of the “information superhighway” is revolutionizing commerce.

Electronic business is the general term for buyers and sellers using electronic means to research, communicate, and potentially transact with one another. Electronic markets are sponsored web sites that (1) describe the products and service offered by sellers and (2) allow buyers to search for information, identify what they need or want, and place orders using a credit card. The product is then delivered physically (to the customer’s hous4e or office) or electronically.

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Database Development (23) Views

Jun 21st
by admin |
in Direct Marketing, Marketing Management
( 0 )

Database marketing is the most effective way to customize the marketing mix to suit target markets. This helps not only in customizing the offering but also its delivery. Database marketing is an interactive approach to marketing that uses all communication tools and media vehicles to reach to the target market. It is also the basis of all relationship marketing efforts of the company. The information stored in the database is used to develop customer loyalty and to identify all potential buyers for any new product or service. It also helps in identifying the most cost effective media and delivery vehicles.

Characteristics of a Good Database:

1)        Each customer or prospect should be treated an individual entity and hence a separate record for him/her should exist in the marketing database. Market segments are an agglomeration of such individual customers.

2)        Each such marketing record should contain all the relevant information and access details like name, address, telephone numbers, frequency of product use, experience with the product, industry and decision making units for organizational customer.

3)    This information should be available to all departments and employees of the company involved in the direct marketing programme so as to enable them to be customer friendly.

4)        The aim of the organization should be to replace routine usage surveys with this database.

5)        Information technology tools should be used to strengthen this database and also develop corporate responses to the customer. These tools can also be used to identify opportunities and threats in the customer environment and craft appropriate responses which will help the marketer to exploit opportunities and neutralize threats. The use id these tools should also help in optimum resource utilization.

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Direct Marketing Mix (27) Views

Jun 21st
by admin |
in Direct Marketing, Marketing Management
( 0 )

The marketing mix in direct marketing mode, by and large, remains the same except for the communication programme and customer service, which have acquired new meaning. For example, if the marketer guarantees delivery of the product within a defined time frame, also promises to take it back in case it fails to live up to customer expectations and return his/her money, then the customer service executive cannot refuse a claim. This is opposed to general marketing where the marketing can put several disclaimers and may refuse the customer. In direct marketing, refusal to accept customer claim without any question may cost the marketer significant losses as he not only loses that customer but subsequent prospects as well. In general marketing, the loss can be contained through other elements of the marketing mix. In addition to marketing mix decisions, the direct marketer has to pay special attention to the following factors in decision making:

1) Communication Programme:

This involves both creative and media decisions. The creative decisions center around the copy platform, graphic design elements, mailers, stickers and so forth.

The media used by direct marketers are mailers, telephone, television and the internet. Direct response print and television advertising are particularly effective in generating response to the offer, especially if it is complex to understand. Also, the direct marketer today uses various outdoor, retail panels( Just Talk and BPL MOTS brands of prepaid Sim cards in Mumbai) and even stickers to retain the brand at the top of customer’s mind. These also serve the purpose of a reminder.

2) Customer Service:

Customer service is a key input in direct marketing. In a direct marketing, physical contact with the customer is low, and it is the quality of service that facilitates customer decision making. Service, therefore, is an investment and cannot be ignored. The customer service mix today involves speed and accuracy of order fulfillment, immediate customer complaint resolution, etc.

3) Timing and Sequencing:

This factor involves determination of whether the product or service is offered once, as a part of the campaign or continuously. This will obviously involve campaign decisions like whether to have bursts, pulsing or a continuous campaign.

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How Direct Marketing Works (25) Views

Jun 21st
by admin |
in Direct Marketing, Marketing Management
( 0 )

Direct marketing, as practiced by professionally managed firms is a four-step process:

  1. Identifying prospects
  2. Establishing contact
  3. Booking the order
  4. Maintaining contacts to develop a mutually beneficial, long-term business relationship.

Identifying prospects and segmenting them into various categories based on certain specific criteria is critical to the success of direct marketing. This is done in different phases. In the first phase, a preliminary list of potential or ‘may be’ customers is made through random mailing, house calls, or mass media advertisements using coupons or some other contact device. In marketing parlance it is termed ‘cold listing’.

This cold list is thoroughly scrutinized and attempts are made to identify those who are not likely to use the proposed product or service due to incompatibility of need, income, age, sex, occupation or any other reason. All such people who don’t qualify as prospects are dropped from the list. The residual list is then known as the ‘hot list’. Firms may sometimes seek to gather additional information about those included in the initial list by contacting them on telephone or through other convenient media.

The next step is to draw a detailed profile of the prospect. This may include information on consumption habits, purchase behavior, personality and lifestyle, social class, exposure to media; and demographic particulars such as age, income, education, profession, family size, domicile and complete postal address. Technically this step is known as ‘profiling the respondent’ or ‘response graphic’.

The list is further split into separate clusters of identical groups, using some demographic, psycho graphic, or behavioral parameters. This exercise is termed segmentation. Firms now adopt many innovative ways of clustering, using novel parameters such as traveling habits, food preferences, ownership of automobiles, possession of assets and durables, and taste for music and art.

Finally, each cluster is researched using some predetermined criteria, to identify the specific segment or segments to be targeted for marketing the product. This exercise is known as targeting. If the product is a high-value item such as jewellery, a computer or an expensive gadget, direct marketing goes into further details and makes an elaborate study of each individual included in the target segment. This is known as individualization. Now the firm may focus on the specific needs of the individual customer. Let us now see how it works in actual practice.

Having identified the customer and prepared a database of individual profiles, the next step is to call at the residence of individual prospects for live demonstration or to offer a free sample of the product. Since the individualistic approach ensures better chances of being heard, it is far less difficult to get an order for the product. In the afore-said example, the firm was successful not only in selling its gadget to a majority of the host-listed respondents, but in the future too, this database may be of immense help in identifying and targeting customers if it introduces some related product such as a blood sugar or body weight monitor, or a self testing kit for diabetic patients.

Finally, having been able to sell the product or service to a customer., it is  essential to keep in touch with him/her through mail, telephone or any other means of communication, to retain him / her as a customer. To create a lasting relationship, firms must maintain regular contact and update their data according to the changing needs and tastes of the customers.

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Why Direct Marketing (24) Views

Jun 21st
by admin |
in Direct Marketing, Marketing Management
( 0 )

The growth of direct marketing in India can be attributed to environmental complexities and the concept of bargaining power. Customer life styles have changed especially in metros and large cities. Today’s customer looks for convenience in shopping and getting the product or service delivered in the comfort of his/her house. Tele shopping, home shopping channels, catalogue marketing and online shopping are some of the tools that enable companies to cater to this core customer value.

Globalization of markets and the internet direct marketing. Today a firm have further facilitated the growth of need not have operations in all its markets but can still cater to the world demand. Dell computers and Amazon are two leading examples of successful direct marketing around the world.

Today the cost of a retail shelf at outlets in major cities is prohibitive. Fragmentation of media and audiences also imply higher advertising budgets. With customer loyalty on the wane and the costs of marketing increasing, firms’ margins have come under pressure. Productivity of marketing resources is now as much of a concern as that of any other resource.

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