MODULE 5 MARKETING APPLICATION

33.1 DIRECT MARKETING

Nature & Scope of Direct marketing

What does direct marketing mean?

How does it differ from conventional mass marketing?
How does it differ from non-store retailing?
What are the features that distinguish it clearly?
Why should it be treated as a distinctive/special form of marketing?

Difference between DM & conventional marketing

Direct marketing (DM) is the process by which a firm approaches its
customers on one-to-one basis & markets its products directly to
them. In conventional marketing, a firm approaches the customers on
a mass basis & sells to them in directly.

Conventional Marketing is Mass Marketing; DM is Demassified Marketing

DM is demassified marketing; it deals with customers on a one-toone basis. In conventional marketing, the marketer sells to a
multitude of customers treating them as a mass; he uses mass
production, mass communication & mass distribution devices.
In DM, the marketer approaches the customers individually,
communicates with them on a one-to-one basis & even offers
products that are modified to suit the requirements of the chosen
customers. DM relies on customized production, individual
distribution & individual communication. The mass approach is
missing here totally.
While mass marketing targets the average customer of the chosen
segment & develops its offer for the average customer, DM targets
the individual customer & develops its offer for him.
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33.2 DIRECT MARKETING
DM is interactive marketing; Conventional marketing is a one-way
activity. For ex, while mass marketing has to remain content with oneway messages, DM enjoys the advantage of two-way communication,
between the firm & its customers. Here, both sides are able to seek &
obtain clarifications in an interactive way.
DM doesnt involve marketing channels/stores; Conventional marketing
relies heavily on it. The marketer secures the sale directly from the
consumer & enables the latter to receive the product without having to
visit a retail store.
DM does not involve advertising/mass promotion; conventional
marketing relies heavily on it. DM compresses the steps in the
marketing process. DM tackles all the component tasks of marketing,
such as customer identification/demand generation, product adaptation,
packaging modification, distribution, price negotiation, marketing
communication/sales promotion in an integrated & compressed method.
Differences between DM & Non-Store retailing: Just because DM does
not involve marketing channels, one should not assume that DM & nonstore retailing are synonymous with one another. DM is not just a
method of retailing; it is a method of marketing. It will thus be incorrect
to consider DM as synonymous with non-store retailing. DM is a larger
process than n on-store retailing.
Differences between DM & Non-Store retailing:
Just because DM does not involve a store, it does not become
synonymous with non-store retailing.
DM is a marketing method; non-store retailing is a mere retailing
method.
DM is a larger process than non-store retailing.
DM compresses various steps of the marketing process.
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33.3 ADVANTAGES OF DIRECT MARKETING
Delivers near-perfect solutions to customers problems: As the marketer
is able to contact the consumer individually, he can know exactly what
the consumer wants & make it available to him. The recent
developments in IT have helped the marketer to gather & process vast
amounts of personal data on consumers.
Helps achieve excellence in products & services: Several marketers are of
the view that mass marketing rests on a culture wherein it is almost
impossible to offer products of excellence. DM is a welcome way-out in
this respect.
Facilitates relations building: DM scores over mass marketing
convincingly when it comes to building customer relations/retention.
While mass marketers are separated from the customers by W/S,
distributors & retailers, direct marketers maintain direct touch with the
customers. They can know why consumers buy a particular brand.
Cost-effective: DM is also more cost-effective. This is largely because it
eliminates channel costs & advertising costs, the 2 dominant elements of
costs in conventional marketing. In B2B marketing too, direct
marketing methods such as direct mail, telemarketing & on-line/web
marketing, work out more cost-effective; the traditional alternative of
reaching them through the sales force is quite expensive.
Versatile form of marketing: One can literally hand pick the target
audience in a direct marketing program. The campaign can also be
timed as per convenience, so as to reach the prospects at the right
moment. Moreover, a direct marketing communication generally enjoys
higher readership.
Benefits the consumers too: DM enables consumers to shop at their

homes. It saves their time & introduces them to different

products/brands. Industrial consumers too benefit from DM; they are
able to learn about available products without spending a great deal of
their time with the salespersons of the firm.
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33.4 REQUISITES FOR SUCCESS OF DIRECT MARKETING
Comprehensive, Reliable & Updated Databases: Lack of proper database
is the primary reason for several direct marketing programs ending up
as a junk mail program. Direct marketers can select the names of
consumers from internal lists compiled & maintained by them or buy
relevant mailing list from mailing-list suppliers.
Careful & Close Targeting of Markets/Prospects: On practical
considerations, some grouping of consumers may be okay but one
should not regress back to mass marketing & satisfied with the so-called
average consumer. The most dangerous word in direct marketing is
average. This is still mass marketing a smaller mass, but mass still.
Service Guarantee & Product Warranty: Consumers should feel free to
return the product if it falls short of their expectations. For ex, all
products of TSN, which is a leading direct marketer, are backed by a
satisfaction-cum-money back guarantee. Consumers should also be
given all relevant information about the product & easy-to-follow
instructions regarding its usage so that they can obtain the full benefits
of the product.
Backroom Logistics: Once the responses start flowing in, there must be a
mechanism for attending to them properly. Also, there should be a
systematic follow-up. Reminder mailers should also go out promptly
wherever necessary. Fast delivery of the product is the most vital part of
backroom logistics.
An Eye for Details: Care should be taken in designing the mailer. The
outside envelop, the sales letter, the reply form & the reply envelope all
must be developed carefully.
Sustained Effort: To derive full benefit out of direct marketing, it must
be adopted as an integral part of the marketing endeavor; direct
marketing is not so effective when it is carried out as a one-shot effort.

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33.5 DIRECT MARKETING CATCHES UP IN INDIA
Forms of Direct Marketing:

Mail Order Marketing/Catalogue Marketing

Direct Mail Marketing
Direct Response Marketing/Database Marketing
Telemarketing/Teleshopping (Home Shopping)
Online Marketing/Marketing on the Web

Many firms are diverting a sizeable part of the ad-budget to DM. In

several product categories, DMs share of the promotion budget has
been steadily increasing. Earlier, DM was being used mostly in
industrial products & services.
It is now slowly spreading to consumer softs & durables, though
industrial products still account for a major part of all DM spend.
Wipro, Modi Xerox, Welcome Group hotels, Philips India, ANZ
Grindlays, Madura Coats & TVS-Suzuki are some of the organizations
that have used DM to a significant extent.
Several factors have contributed to the rise of DM. raising media costs,
increasing fragmentation of media & their glowing clutter, have been
making mass communication increasingly expensive. Companies are
naturally tempted to try DM.
The new competitive pressure in the market place is the 2 nd factor. The
entry of many MNCs into India who are used to DM in their home
markets, has been another contributor to the spread of DM.
With product/brand clutter, market segmentation & targeting have
become increasingly complex & difficult. The risk has also been
increasing. Marketers are naturally attracted to DM, which helps work
out & reach finely focused targets at a relatively low cost & low risk.
The fact that product differentiation has been getting increasingly
blurred has significantly contributed to the growth of DM.
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33.6 DIRECT MAIL MARKETING
Direct Mail Marketing (DMM) is similar to Mail Order Marketing
(MOM). Usually, when a trading house markets various products by
mail order, we refer to it as MOM or MOB (mail Order Business). In
direct mail marketing, not only letters/brochures are mailed to the
prospects, but free product samples, gifts & compliments are also
mailed, depending on the context. A few examples:
HLL using DM for Denim Aftershave: HLL had relied on direct mail to
a sizeable extent in marketing its aftershave brand, Denim. The target
was the members of the elite clubs in the metros. Each prospect was
mailed a 3-color brochure with a Scratch n Sniff coating as a sample.
Order forms were included in the brochure.
Campaigns by Datamatics Direct: Datamatics direct is one of the leading,
independent direct marketing outfits in India. It relies heavily on direct
mail. It targets the upper middle class/middle class consumers. In a
given campaign, it concentrates on selling just 1 or 2 products.
Datamatics campaign for ANZ bank: Datamatics Direct did a direct mail
campaign for ANZs loan on equity shares. ANZs OD facility on equity
shares comes as a branded product cashetts (cash against assets).
Datamatics campaign for Lux soap: In another direct mail campaign,
Datamatics focused on HLLs Lux. As per the arrangement it had worked out with
HLL, Datamatics Direct made a special concessional offer to prospects buying Lux
beauty shower & Lux beauty bar soaps. The direct mail communication stated
that mail order received through the enclosed business reply card would receive
prompt attention & the item on order would be delivered at the doorsteps of the
customer & cash could be paid on delivery.

Contract Direct campaign for Hyatt Regency: Contract Direct did a

direct mail campaign for Hyatt regencys Oasis membership. Hyatt was
collecting membership for its discotheque, Oasis. The campaign offered
complementary membership to businessmen, professionals & members
of other discos. It was a well-targeted DM exercise. It managed to
garner a high conversion rate, a response rate of 41% 7 a final
conversion rate of 35.3%.
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33.7 TELESHOPPING
Teleshopping has been gaining ground in India in a steady manner. A
variety of favorable factors have made it possible. 1st, the relevant
technologies are available, 2nd, India is now more open to such
marketing methods & 3rd, TV channels have multiplied & TV as a
medium has matured in the country; telecom infrastructure too has
grown.
The Early entrants: Three TV channels grabbled the idea early & set
apart a good slice of their telecast time for the new concept: DD, Zee &
United Television (UTV). Similarly 4 TSNs entered the arena as
pioneers: Dees Home shopping (Dees), Teleshopping Network (TSN),
United Teleshopping (UTS) & Asian sky shop (ASS). UTS was a division
of UTV; ASS a division of Zee; Dees & TSN were independent
networks.
Teleshopping will expand in India in the coming years. Two major
engines are driving India into electronic shopping: Consumers
redefinition of shopping convenience & technologys impact on
consumer shopping behavior.
Requisites of successful teleshopping: Teleshopping too needs to be
targeted tightly in order to be effective. The products hawked & the
consumers targeted must match closely. The networks must recognize
that certain categories of products blend particularly well for
teleshopping, like: household appliances, jewellery, toys, cosmetics,
watches, office stationary, auto accessories, leather products & financial
products.
Selection of the right kind of people as the hosts & hostesses is also
important. The hosts & hostesses can make/break a teleshopping
program. It makes sense to select as hosts, persons who are not
celebrities but are people whose personality goes well with the products
they sell. When one uses a celebrity as a host, the focus shifts to the
celebrity rather than the product aired. A pleasant, viewer-friendly
person will do for most products.
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