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DIRECT MARKETING
CHANNEL
 Direct marketing channel
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 A marketing channel that has no intermediary levels.
 Direct marketing consists of direct communications
with carefully targeted individual consumers to obtain
an immediate response.
 Interactivity is essential to this process.
 Catalog companies, direct mailers, and telemarketers
have been using the approach for years.
 However, improved database technologies and new
media (computers, modems, fax machines, e-mail, the
Internet, and online services) have changed the
direction and nature of direct marketing.
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 Most direct marketers see direct marketing as

playing an even broader role than simply selling
products and services.
 Mass marketing is targeting broadly with
standardized messages and marketing offers
distributed through intermediaries.
 Today, there is a trend toward more narrowly
targeted or one-to-one marketing (called direct
marketing).
 a. What is Direct Marketing?
4  Mass marketers have typically sought to reach millions of buyers with
a single product and a standard message delivered through the mass
media.
 Under this mass-marketing model, most marketing involved one-way
Communications aimed at consumers, not two-way interactions with
them.
 Direct marketing consists of direct communication with carefully
targeted individual consumers to both obtain an immediate response
and cultivate lasting Customer relationships.
 Direct marketers communicate directly with consumers, often on a
one-to-one, interactive basis.
 Today, improved databases permit more sophisticated direct marketing
and tailoring of marketing efforts.
 Beyond brand and image building, direct marketers seek a direct,
immediate, and measurable consumer response.
 b. The New Direct Marketing Model
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 Early direct marketers--catalog companies, direct mailers, and

telemarketers--gathered customer names and sold goods
mainly through the mail and by telephone.
 Today, advancement in database technologies and new
marketing media—especially the Internet and other electronic
channels-- direct marketing has undergone a dramatic
transformation.
 Direct marketing may be perceived as being a distribution
function (direct distribution) and a communication function
(direct contact with the consumer).
 Some firms use direct marketing as a supplemental medium.
  However, for many companies today, direct marketing is more
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than just a supplemental channel or medium.
 The Internet and electronic commerce now constitute a new
and complete model for doing business.
 Some say the Internet is the foundation for a new industrial
order.
 Some firms (and the number is growing) use the new direct
model as their only approach.
 Experts envision the day when all buying and selling will
involve direct connections between companies and their
customers.
 The new model will change customer’s expectations about
convenience, speed, comparability, price, and service.
 c. Benefits and Growth of
Direct Marketing
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 i. Benefits to Buyers
 Direct marketing benefits buyers in many ways:

1). It is convenient.
2). Buying is easy and private.
3). Greater product access and selection.
4). Provides a wealth of comparative information.
5). Online buying is interactive and immediate.
 ii. Benefits to Sellers
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 Sellers benefit by:

1). Direct marketing is a powerful tool for customer relationship
building.
2). Direct marketing can also be timed to reach prospects at just
the right moment.
3). Because of its one-to-one, interactive nature, the Internet is an
especially potent marketing tool. Continuous relationships can
be developed.
4). Reduce costs and increase speed and efficiency.
5). Online marketing offers greater flexibility.
6). The Internet is a truly global medium.
 d. The Growth of Direct Marketing

9  Sales through traditional direct marketing channels

have been growing rapidly.
 Sales through direct marketing channels are growing
at about 8 percent annually (as compared to only 6
percent overall sales growths).
 Online marketing is growing explosively.
 Sales on the Internet have been growing at about 60
percent per year for the last five years.
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 Trends that seem to moving our society toward even

more direct marketing include:
a). Degasification--focus is toward mini markets.
b). Lack of time and congestion. Higher costs of driving.
c).Growth of delivery services and the support
infrastructure.
d). Growth of computer power and databases.
e) Growth has also occurred in the business-to-business
sector.
 e. Forms of Direct Marketing
 i. Face-to-Face Selling
 The original and oldest form of direct marketing is the sales.
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 Today, many companies’ still use salespersons or representatives to reach their
prospects, develop them into customers, build lasting relationships, and grow the
business.

 ii. Telemarketing
 In telemarketing telephone is used to sell directly to consumers.

 Two general types of telemarketing include:

1). Outbound telephone marketing to sell directly to consumers.

2). Inbound toll-free 800 numbers to receive orders from television and radio ads, direct
mail, or catalogs.
 900 numbers are used to sell consumers’ information, entertainment, or the

opportunity to voice an opinion on a pay-per-call basis.

 Many customers appreciate the offers they receive by telephone, however, because of

the recent explosion in unsolicited telephone marketing, lawmakers are responding

with efforts to control unsolicited telemarketing during certain hours of the day.
 Most telemarketers support some form of legislation.
  iii. Direct-Mail Marketing
 Direct mail marketing involves sending an offer, announcement, reminder, or
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other item to a person at a particular address.
 Direct mail is well suited to direct, one-to-one communication.

 Advantages include:

1). High target-market selection

2). Personalized.
3). Flexible.
4). Allows easy measurement of results.

 Even though the cost per thousand can be high, the people who reached through
direct marketing are better prospects than those who reached with other media.
 New forms of direct mail include:

1). Fax mail.

2). E-mail.
3). Voice mail.
  iv. Catalog Marketing
 Catalog marketing involves selling through catalogs mailed to a selected list of
customers or made available in stores.
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 A catalog is a printed, bound piece of at least eight pages, selling multiple
products, and offering a direct ordering mechanism.
 Some stores offer a complete line of goods through their catalogs.
 Most direct retailers have put their catalogs on the World Wide Web.
 Web catalogs are passive and must be marketed themselves.

 v. Direct-Response Television Marketing

 Direct-response television marketing takes one of two major forms.
 1). Direct-response advertising occurs when marketers air television spots or
infomercials.
 2). Home shopping channels are entire programs or channels dedicated to
selling goods and services.
 In the near future, two-way interactive television and linkages with Internet
technology will make television shopping much different from what it is today
and it will become one of the major forms of direct marketing.
  vi. Kiosk Marketing
 Some companies place information and ordering machines (called kiosks) in
stores, airports, and other locations (in contrast to machines which dispense
14 products--vending machines).
 Business marketers can also use kiosks (such as at trade shows).
 Kiosks are also going online as companies merge real-world and virtual worlds of
commerce.
 The Gap interactive kiosk is a great example of this technology.

 vii. Online Marketing and Electronic Commerce

 Online marketing is conducted through interactive online computer systems,
which link consumers with sellers electronically.
 There are two types of online channels:
 1). Commercial online services offer information and marketing services to
subscribers who pay a monthly fee. The best known is America Online.
 2). The commercial online services are now being overtaken by the Internet as
the primary online marketing channel.
 The World Wide Web is a popular meeting place for consumer and business
commerce.
 • Rapid Growth of Online Marketing
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 Although still in their infancy, Internet usage and online

marketing are growing explosively.
 Electronic commerce is the general term for a buying and
selling process that is supported by electronic means.
 This would include electronic marketplaces (these are
“market spaces” in which sellers offer their products and
services electronically, and buyers search for
information, identify what they want, and place orders
using a credit card or other means of electronic
payment).
 • The Online Consumer
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 The Internet users are an elite group.

 They tend to be younger, more affluent, better educated, and
more male than the general population.
 However, female usage almost equals males.
 Net users come from all age groups, about half are 40 years or
older, they differ psychographically from the general
population, and they differ in their approaches to buying and
in their responses to marketing.
 Teens are still a targeted group.
 The seniors group is also expected to grow in the next several
years.
 • Creating Online Marketing
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 Marketers can conduct online marketing in four ways:
1).By creating an electronic online presence.
 Using this method, a company can:

a). Buy space on a commercial online service.

b).Company can open its own Web site.

2). Web sites vary in purpose and content.

a).The most basic type is a corporate Web site.
 These sites are designed to handle interactive communication initiated

by the consumer.
 They seek to build customer goodwill and to supplement other sales

channels rather than to sell the company’s products directly.

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 b).The marketing Web site is designed to engage consumers
in an interaction that will move them closer to a purchase or
other marketing outcome.
 With this form of site, the marketer initiates communication
and interaction.
 3).Creating a Web site is one thing; getting people to visit the
site is another.
 The key is to create enough value and excitement to get
consumers to come to the site, stick around, and come back
again.
 High involvement products (such as new cars, computers, or
financial services) have greater success than do lower
involvement products.
  The second method is to place advertisements online.
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 Companies can place online advertisement in several ways:

1) The company can put online ads that pop up while

subscribers are surfing online services or Web sites.
2). Content sponsorship allows a company to sponsor a
specific report on one of the services.

 The third method is to participate in Forums,

Newsgroups, and Web Communities.
1). Forums are discussion groups located on commercial
online services.
2). Newsgroups are the Internet version of forums.
  3). A Bulletin board system (BBS) is specialized online services
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 4). Web communities are sites that provide a place where members
can congregate online and exchange views on issues of common
interest.
 Visitors to these Net neighborhoods develop a strong sense of
community.
 Web communities can be either social or work-related.

 The final method is to use E-mail and Web casting.

 The normal method used is to encourage prospects and customers to
send questions, suggestions, and even complaints to the company
via e-mail.
 Quick response to such messages is a key.
 The Promise and Challenges of
Online Marketing
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 Online marketing offers great promise for the future but is still
years away from reaching its potential.
 Online marketing is still just one important approach to the

marketplace.
 The Web is still not a moneymaking proposition for many firms.

 Challenges that online marketers face include:

1). Limited consumer exposure and buying.

2). Skewed user demographics and psychographics.
3). Chaos and clutter.
4). Security.
5). Ethical concerns.
 f. Customer Databases and
Direct Marketing
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 There are differences between mass marketing and

so-called one-to-one marketing.
 A customer database is an organized collection of
comprehensive data about individual customers or
prospects, including geographic, demographic,
psychographics, and behavioral data.
 The database can be used to locate potential
customers, tailor products and services to the special
needs of targeted customers or/and maintain long-
term customer relationships.
 Database marketing
 Database marketing is the process of building, maintaining,
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and using customer database and other database for the
purposes of contacting and transacting with customers.
 A customer database is much more than just a list of names

(i.e., customer mailing list).

 Business-to-business marketers and service retailers most

frequently use database marketing.

 Companies use their databases in four ways:

1). Identifying prospects.

2). Deciding which customers should receive a particular offer.
3). Deepening customer loyalty.
4). Reactivating customer purchases.
Like many other marketing tools, database marketing requires a
special investment.
 Other Marketing Applications through Databases
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 Some of the important uses or advantages of using

database market are as following:
• Match profiles to cross-sell other products to customers
• Modify marketing messages based on customer profiles
• Reach out to customers to reinforce the purchase decision
• Find new customers
• Gain insight into who is purchasing products
• Improve customer service
 Beside uses database marketing also has some
disadvantages like
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 Marketing databases can be costly and time

consuming,
 Databases need to be carefully planned
 Consumer privacy issues.
 b. Integrated Direct Marketing
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 Too often, a company’s individual direct marketing

efforts are not well integrated with one another or
with other elements in its marketing and
promotional mixes.
 A more powerful approach is integrated direct
marketing, which involves using multiple-vehicle,
multiple-stage campaigns.
 c. Public Policy and Ethical Issues in Direct
Marketing
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 Direct marketers and their customers usually enjoy mutually rewarding

relation-ships, however, occasionally, a darker side emerges.
 Irritation, unfairness, deception, and fraud are common complaints.
 Many consumers perceive that an innocent desire to become “close” to
the customer really is an invasion of privacy (this is the toughest issues
facing the industry).
 1). Consumers can benefit from database marketing, but at what cost to
privacy?
 2). in a company’s desire to build a database, they often get carried away.
 3). in a recent survey, 79 percent of consumers expressed concern about
their privacy.
 In reality, direct marketing is just too expensive to waste on consumers
who don’t want it.