PRACTICAL BACKGROUND TO DIRECT MARKETING

Practical Background to Direct Marketing

            Imagine you can minimize your concern from the world news of escalating oil prices by avoiding demanding too often.  Also, you can retaliate against store owners who are obviously patronized by a crowd of customers but who has little concern to relax the long-waiting lines to the cashier.  Through a company that provide direct marketing (DM) to its customers, these savings and conveniences can be obtained.  Aside from this, customers will get satisfaction in the same way from the first experience of the DM service or even better since the company itself is upfront and personal with each of their clients. 

 

            DM is a commitment formed by a firm to a satisfied customer wherein the whole product experience from order request to delivery is provided.  Commitment is an important factor for DM because the firm should be a consistent service provider to obtain the ultimate objective of the strategy which is brand recognition and loyalty.  However, when a firm engages to DM activities, it has communicated to a customer a bold attempt to secure their trust and confidence through exposure firm’s resources and capabilities.  This may result to overestimation of what the firm can actually provide and how long.  In effect, the risk of drifting to an expectant customer and unable to completely suffice its need becomes an area of concern. 

 

            In respect to this, communication channels that directly link the warehouse, service units, collection and other divisions of the firm to customers are necessary.  Inquiries, orders, service requests and other complaints can be channeled through interactive websites, phone or kiosks.  For the advertising and feedback, the firm can use direct mail, catalogs interactive TV and websites.  As observed, DM communication offers efficient way to reach customers.  It also supplies the data in order for the firm’s information system to be regularly updated.  In effect, the customer database from DM communication is important for the firm to aid in customer management as well as to customers for an informed purchase and after-sales satisfaction. 

 

            At this point, it is fitting to say that DM supports not only the marketing area of a firm but also other departments.  Defects are communicated through the production team, delivery delays to the scheduler, competitive discounts/ other promotions to finance, and additional manpower to the human resources.  The advantageous part of this support is that the information is directly gathered from end-users both potential and actual at present time and divulge by firm’s employees.  This will lead to faster customer response, customization and consistency of operational actions.  Costs are minimized since market research is not necessary and middlemen’s conflicting interests against the firm’s goals is avoided.  The day-to-day addressing of feedback will guide higher management to act on potential opportunities and threats in the competitive environment for the purpose of strategic planning.

 

            DM is used as an advertising medium apart from mass-intended channels such as from print advertisements or commercials form radio and television.  There is a personal touch when a firm delivers its messages because customers are contacted personally.  Their individual concerns are highlighted making a customized communication loop.  They would feel special and again landing into the core of DM to satisfaction and commitment.  Due to this, DM is acknowledged to be compatible when offering expensive products that customers regarded as risky purchase.  This is so because those products either occasionally purchased (computers, cars) or suggest status of the user (jewelries, clothes).

 

            On the other hand, DM and mass media can go hand-in-hand to create an integrated DM.  This process will expose large potential customer base at awareness level initially through mass media.  After demand is stimulated, interested customers would then undergo the DM of the firm from providing product knowledge to actual purchase and delivery.  In the contrary, since the high-end market is the most likely target of the firm, the resort to mass media options becomes minimal and strategic.  Locations of billboards will be situated near business centers or heavily trafficked highways and print ads will be seen in magazines rather tabloids.  The secret lies when DM is successful.  Repeat customers create experience curves wherein marketing of word-of-mouth becomes natural outcome from satisfaction.  As suggested, DM is most effective for products that are viewed by customers on their added-value rather than price.

Channels of DM

            Face-to-face selling is the oldest form of direct marketing and is considered the most “direct” DM channel.  However, this can be very expensive and requires a pool of devoted sales agents that it undermines the capability of technology to make operations efficient.  Such can be useful when targeting a huge contract from a major customer.  Second, direct mail usually has leaflets and other give-away from marketers for the intention to send an offer, message and reminder to a person.  This channel became more popular with technological improvement of fax-mail, e-mail and voice-mail that enables a firm to send the message with lesser on-freight risks from postal services and lower costs with wider customer scope in just a click.

 

            Catalog marketing can be sent directly to clients in print form or through CDs and online videos.  These catalogs embody either the general products of a firm, only their specialty ones or those under over-stock level.  In effect, the channel does not only maximize revenues but also minimize warehousing costs.  However, a database is necessary for an effective catalog marketing strategy.  This will avoid re-distribution of catalogs to customers under bad debt and control its inventory.  In contrast, telemarketing or also referred as m-commerce functions in two way.  It can serve both inbound and outbound for the purpose of taking orders, maintaining relationships, prospecting and answering assistance and technical inquires.  Unlike catalog, this channel is prompt since the firm and customers are at the other end of the line.  

            Infomercials and shopping channels are classified under direct-response marketing.  There is little dynamic interaction between the channel and customers unless the latter take a call.  Such are more advertising-based channels intended to highlight the features of the firm’s products.  Its scope is comparatively larger than any other channels but costs are incurred by the firm based on frequency or length of airing.  Further, kiosks can serve as the mini-retail store of the firm to emphasize its new products less known by the market. It is a small building with an agent capable to provide ample information about the product launch.  It is a best place to house “hot” products whose demand is “sleeping” since market testing can be conducted in the kiosk.

 

            These channels basically require database to store information of customers, complaints and other key statistics.  Without database management, problems will be continuously cured without an antidote to completely deter.  No other channel can provide the platform to retrieve data in an efficient manner that forgets about the clutter of corporate records in white papers than the use of information technology.  This is one way e-marketing extend aid to the firm.  E-marketing involves electronic podium to create marketplace through internet.  A customer can view the products, purchase them and pay all at one internet experience.  Interactivity is high than any other channels.  It is also responsible for e-mail.  However, unsolicited emails could reap customer relationships instead of enforcing it due to privacy needs of customers.     

 

Cases, Studies and Applications of DM

            is rethinking its marketing strategy for its arthritis drugs.  Doctors are too busy in examining the patients that after giving the necessary recommendation, there will be short-time for patients to forward their queries about other features of the products.  This may result to less effective benefits of the drugs due to sub-optimal emphasis on other medication factors like eating before taking a drug.  To resolve this issue, the firm had provided user manuals for patients.  The manual is designed with an easy-to-understand language and supplemented with health tips to promote readability and functionality.  This strategy is backed by its website and links including 800-telephone number.

 

            Successful direct marketing-driven companies and executives emphasize knowledge on marketing techniques, experience in DM campaigns and familiarity with the new available technologies.  They must have costumer understanding and must be able to innovate as fast as the development in technology to remain competitive.  With this mind-set, they can anticipate customer response and segmentation.  Otherwise, they would loose a share in the market from a competitor who exploited the presence of new printer models, secured mode of payment or fad.  Creating knowledge from databases and environmental analysis are critical to execute DM plan. 

 

            As the world moves toward dynamic social and technological changes and so consumers had evolved into more complicated creatures.  This applies to direct marketing advertising.  From the two dimensions of advertising beliefs (economic and social effects) on a study way back on 1968 and supported in a similar conclusion on 1980 studies, recent surveys revealed that the dimension spans to six (perceptions about personal and social benefits, commercial execution, deceptive factor, offensive aspects, frequency of airing, and absence of sufficient information).  To close the debate, (1993) concluded a seven-factor model of consumer evaluations which include personal (product information, role/ image, pleasure) and social effects (good for the economy, materialism, value corruption, no sense).

 

            The study of (1997) showed that DM advertising segmentation is crucial if the firm wants to maximize their DM activities.  This is because their data suggested that there is no general attitude on consumer’s view on DM.  Another, ordering through information is high for the word-of-mouth and low on television because impersonal commercials have the tendency to depart from the reality in favor of entertainment while the former can be more formal and interactive.  Further, demographic investigations suggested that more women favor DM advertising wherein men tend to be critical.  Other factors such as age, occupation and education have direct impact on person’s view and response on DM.     

 

            At the end, the study recommended that firms using DM advertising can enhance the acceptability and positive effects of DM.  This can be done by evaluating the contents of a certain print-ad carefully since it can destroy the credibility of product information.  Money-back guarantees can also uplift the attractiveness of a product exposed under DM since it minimizes the risk of the speculating consumer.  Lastly, to avoid

 

Consumers’ DMA beliefs

General advertising attitude scales are adaptable to DMA and show largely similar beliefs toward advertising in general and DMA. Two conclusions can be drawn from the results in Table 2. First, scale items and constructs used in research on advertising attitudes in general apply equally well in the specific domain of DMA. This can be seen from the acceptable coefficient alphas for product information, social role and image, hedonic pleasure, value corruption, good for the economy, materialism, and the .504 alpha for falsity/no sense. This bodes well for both the generalizability of the specific items used by and the categorization of advertising beliefs into personal uses and societal effects. Second, in general, consumers have positive feelings about DMA. Specifically, they believe that DMA provides useful information, provides some level of hedonic pleasure, and is good for the economy. Additionally, consumers in general feel that DMA poses no great threats to societal values and is not generally misleading or nonsensical, as responses generally lean toward [] the more positive side of the scale midpoints. There may be some concern that DMA is a poor referent for consumers’ social role and image and promotes materialism, but these results mimic those of advertising in general and should generate no great concern.

Segmenting consumers based on DMA beliefs

Distinct segments of consumers can be formed based on DMA beliefs. Using the clustering procedure of SAS, three segments of consumers, based on DMA beliefs, were found. The pro-DMA cluster rated DMA more favorably (or less critically) on all seven factors of DMA beliefs. Another segment, the critics-of-DMA, was more negative across the board in their DMA beliefs but still found value in DMA. The final segment, ambivalent-DMA, fell somewhere between the first two segments on most items. Thus, like, clearly identifiable segments of consumers, based on their DMA beliefs, can be formed.

Characteristics of consumer segments

Consumer segments differ in some DMA beliefs, information search, DM purchase experience, and demographics – but not DM ordering mode. Given the three segments identified, what can be distinguished about their DMA attitudes, use of information, DMA methods, spending and frequency behaviors, and demographic differences? First, the general attitude items show there are significant segment differences in how essential DMA is viewed and the perception that DMA fosters unneeded buying (Table 4). Second, the general pattern of media information influence shows a difference in the magnitude of influence for the different information sources but generally the same ordering of information from word-of-mouth (high) to television advertising (low). Third, and very significantly, there is no difference (at the .05 level) between the segments in direct marketing ordering methods (print or broadcast). However, significant differences (p [less than] .10) are observed in the amount spent and the frequency of ordering. These differences are consistent with the beliefs and overall attitudes expressed by each of the three segments. This result provides further evidence of the validity of our findings. Of some comfort to direct marketing practitioners is that even those most critical of DMA still use it to make purchases. Finally, in analyzing the demographic differences in DMA segments, an interesting observation can be made. Like (1992, 1994), there is a difference in DMA belief segment membership based on age (at the .10 level), lending support to their findings. Additionally, also at the .10 level, occupation and education were different among the DMA belief segments, while at the .05 level, income was different among the segments. Only gender did not evidence statistical differences, although one can plainly see that more women are in the pro-DMA segment, while more men appear to be critical of DMA. Hence, demographics should continue to play an important role in market segmentation for DMA sponsors.

Additionally, our results also indicate that, in order to enhance consumers’ positive feelings toward DMA, direct marketers may take several steps. For example, in the context of providing product information, (1990) suggest that DMA does a superior job relative to other magazine advertisements (product/store image, institutional advertisements). However, progressive direct marketers now recognize that the appearance of an ad, the character, and personality communicated by the photos and graphics can enhance or destroy the credibility of the product information supplied by the ad (1986). Thus, consideration of long-term awareness, interest, and liking for an ad are as meaningful for “action” oriented direct marketing ads as it is for TV or magazine advertising. Another method of building positive beliefs toward DMA is to reduce consumers’ risk perceptions by offering money-back guarantees or by offering products made by reputable companies (, 1988;, 1981). In order to overcome consumer and regulatory concern over privacy issues, increasingly companies seek consumer permission before selling their names to other organizations. Actions such as these will further enhance the credibility of DMA. In sum, the results of this study fills a void in the published literature on this important topic and suggests ways the direct marketing industry could benefit from it. Future studies should attempt to replicate the findings reported here employing national probability samples to improve the generalizability of these findings.              

 

 

 

 

                         

 

 

 

 

           

 

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