Direct Marketing

Introduction

Marketing: The Beginning

Marketing is an organizational function and a set of processes
for creating, communicating and delivering value to the
customers, for managing customer relationships in ways that
benefit the organization and its stakeholders
CRM is practice of analyzing and utilizing marketing
databases and leveraging communication technologies to
determine corporate practices and methods that will maximize
the lifetime value of each individual customer to the firm

Relationship

CRM

Tool 1
Tool 2
Tool 3
DM
Tool 5
.
.
.

Customer

CRM: The Root Cause

Marketing: The Beginning

Old

Classical

Starting Point

Factory

Target market

Focus

Products

Customer Needs

Contemporary
Individual Customer
Customer
Experience
(Personalisation - DM)

Means

End

Selling &
Promotion

Profits thru
Sales volume

Integrated Marketing

Profits thru
Customer Satisfaction

CRM

Profits thru
Customer. Loyalty

Our Behavior
Value consciousness & Intolerance
Information Availability
Decrease in Preference Quotient
Decrease in Output through Media and communication
Increasing Scale, Complexity and Avenues for business.

Direct Marketing
Direct marketing is a sub-discipline and type of marketing.
Characteristics against marketing or advertising:
It attempts to send its messages directly to consumer
(B2B, B2C), without the use of intervening media. (How do
we get to reach customer directly?)
It is focused on driving purchases that can be attributed to
a specific "call-to-action." DM involves an emphasis on
traceable, measurable results (known as "response" in the
industry) regardless of medium.

CASE STUDY 1
Food Inc.

Direct Selling
A Method of distribution of consumer goods and services
through personal (sell to buyer) contract away from fixed
business locations, primarily in a home.
A form of selling without retail outlets, distributors, wholesalers
or any type of middlemen
The marketing of consumer goods and services directly to
consumers in their homes by way of explanation and/or
demonstration through a salesperson. The location can also be
a friends home, the workplace of the customer during breaks
or other places away from

Direct Selling business composition

Direct Selling Business Leaders

Avon (9 billion)
Amway (6 billion est.)
Mary Kay (3 billion est.)
Herbalife (2 billion)
Tupperware (1.8 billion)
Nu Skin (1 billion)

Direct Sellers Profile

72% of direct salespeople are married
90% are women. 8%are under age 25. 63% between 25 and 44
and 24%between 45 and 64.
To be a successful direct selling agent, an individual must be a
good communicator and be highly motivated.
Sales performance and job satisfaction were independent but
higher levels of effort led to higher levels of performance
and satisfaction.
Persistence and initiative are major characteristics of success
in direct selling.

Direct Marketing
Direct Marketing emphasizes on personalized interactions
with the target audience.
The personalization of interactions is thought to foster greater
customer loyalty and better return on marketing investment.
(Grocery, Baniya )
DM seeks to reinvest marketing with the personal touch
absent from many modern business interactions.

History
Lester Wunderman 1967 Amex, Columbia Records
Junk mail (1954): It refers to unsolicited commercial ads
delivered via post office or directly deposited in consumers' mail
boxes.
SPAM(1993): "unsolicited commercial email.
Although Wunderman may have been the first to use the term
direct marketing, the practice of mail order selling (direct
marketing via mail) essentially began in the U.S. upon invention
of the typewriter in 1867.

History
The first modern mail-order catalog was produced by Aaron
Montgomery Ward in 1872.
The Direct Mail Advertising Association, predecessor of the
present-day DMA, established in 1917.
Bulk Mail postage rates were established in 1928.
DM in Europe can be traced to the 15th century. Upon
Gutenberg's invention of movable type. The first trade
catalogs from printer-publishers appeared sometime around
1450.

Evolution of DM

Primitive Marketing
(Barter)

1 to 1 Marketing

Direct &
Database Marketing

Mass Marketing
(Huge Groups)

STP Marketing
(Seg, Tar, Pos)

Mass Mkting Vs Direct Mkting

Mass
Competitive Attention
Breadth
Remember
Impression
Pay for Everyone

Targeted
Selective Attention
Depth
Response
Decision
Pay for Targets
ROI Calculation

DM: Development and Growth

Development
Wander man
Direct mail boom 1950 1970
Growth
Technology
Declining effectiveness of traditional media
Changes in marketing Information
Need for better targeting

Limitations of DM

Acquisition of data of individual customers may be difficult

Reluctance
The customers could be exposed to information overload Direct
marketers are perceived to be contributing to this overload.
Requires highly skilled staff to analyze each customer profile.
Information from database is used to produce specific appeal based
on consumers personal characters &/or past purchase behaviour.
It is important to determine:

What the programs objective will be

Which markets to target through the use of a list or a marketing database
What direct marketing strategies will be employed
How must the effectiveness of the program be evaluated
Updation of Database (RFM Model)
It is important to enter the data each time a transaction is made.

Objectives of DM

Repeat Purchase
Introduction of New product
Cross Selling
Another Channel
Minority markets
Establishing Loyalty
Identification of Prime prospects

Paretos Law
20:80 Ratio
Reverse Pyramid Mapping

Sales

Market

Features of DM
Targeting
Interaction
Control
Continuity

FACTS
Auto manufacturers spent $8 billion on direct marketing
advertising in 2007, realizing $77.8 billion in sales. That
translated into a $9.68 ROI per dollar spent.
By 2012, auto manufacturers are expected to invest $9.8
billion on direct marketing, yielding $108.1 billion in sales, with
an ROI of $11.

FACTS
Automotive retailers, whose direct marketing efforts drive the
highest ROI of the 52 US industries tracked by DMA, invested
$7.3 billion in direct marketing advertising in 2007. As a result,
this sector of the industry saw $248.1 billion in sales and an
ROI of $33.81.
Vehicle retailers will see a slight decrease in ROI, to $33.67
by 2012. That will result from spending $8.8 billion on direct
marketing advertising and earning $297.8 in sales.

FACTS
Direct-order campaigns produced at least 40% of direct
marketing sales in 2007.
In Q3 2007, Toyota was the No. 1 vehicle brand mailer of
service promotions.
Of the domestic brands, Ford, Chrysler, and Dodge sent out
the most direct mail sales campaigns during Q3 2007.

FACTS
Of the foreign auto brands, Toyota, Mercedes-Benz, and
Honda sent out the most direct mail sales campaigns during
Q3 2007.
Most direct mail sales pieces sent in Q3 2007 were aimed at
acquiring new customers.
About 75% of the auto industrys direct marketing investment
and sales center around consumers. B2B sales make up the
remainder.

CASE STUDY 2
DM Tools/Means
Each group 1 each
Meaning, methods, adv, dis. adv. Lim of
thtools/means

Means of DM

Direct Mail
Telemarketing
Catalogue Marketing
Database Marketing
Email
Response Ads

Direct Mail
S

Sight
Pre Selection
Low Attention Competition
Personalization
High Response Rates

Easy to disengage
4 seconds to involve
Postal system dependent
List dependent

Facts about Direct Mail

People read direct mail, looking for a reason to stop
The margin of error on direct mail is greater than in any other medium.
Special interest offerings tend to do best in direct mail, but the more
specialized the interest, the more limited the growth potential (requires
product proliferation old/new/same).
There is an inverse relationship between degree of pre-existing
interest and cost per response.
There is a direct relationship between readership and response.
People are not dying to hear from you.
Very little body copy is ever actually re-read.

Telephone
S

Sound
Chemistry
Interaction
One to One
Pre-Selection
Low Attention competition

W
Interruptive
Requires Time
Annoying

Applications of DM

Generate leads.
Screen leads before follow up.
Arrange opportunities for representatives.
Direct sales.
Encourage cross / up selling.
Dealer support.
Account servicing.
Market research.
Test marketing.

Dos of Telemarketing

Donts of Telemarketing

DM Campaign

Direct Marketing Cycle

Database Marketing

Names
Addresses
Purchase details
Transaction Details
Demographic Details
Media Details
Complaints
Arranged by geography
Credit history

Purpose
Primary information about
suspects/prospects/existing consumers
Improve selection of market segments
Stimulate repeat purchases
Cross-sell
CRM

Database Types

House list
Response list
Compiled list
List brokers

CASE STUDY 2
List of DM terms
13 terms for each group
Meaning and example

DM & Technology

DM Services

Data Centre: Cleaning, Lead Management, Analysis

Loyalty Program Management
Creative & Studio, Print Production
Interactive Media Web, Email, SMS
Customer Service: Help Desk (I/B & O/B), Support, Service
Rewards Sourcing, Merchandising
Fulfillment
Partnerships Creation: Promotions / Loyalty
Relationship Events
Bulk Mailing and Fulfillment
Contests & Promotions
Training

CASE STUDY 4
Understanding a DM AgencyFind 1 company
Indian/Global
Business should strictly be DM
Find out
About the company (History, Board Members, Locations)
Services they provide (List All, describe 4)
Write what are their USPs? How do they claim they are
different?
List the clients stated on the website
Describe 2 case studies in detail
The need
The process
The outcome