Direct marketing is a channel free approach to distribution and/or marketing communications. So a company may have a strategy of dealing with its customers ‘direct ly,’ for example banks (such as CityBank) or computer manufacturers (such as Dell). There are no channel intermediaries i.e. distributors, retailers or wholesalers. Therefore – ‘direct’ in the sense that the deal is done directly between the manufacturer and the customer.
As mentioned above, ‘direct’ also in the sense that marketing communications are targeted at consumers by the manufacturers. For example, a brand that uses channels of distribution would target marketing communications at wholesalers/distributors, retailers, and consumers, or a blend of all three. On the other hand, a direct marketing company could focus upon communicating directly with its customers. Direct marketing and direct mail are often confused – although direct mail is a direct marketing tool.
There are a number of direct marketing media other than direct mail. These include (and are by no means limited to):
Inserts in newspapers and magazines. Customer care lines.
TV and radio adverts with free phone numbers or per-minute-charging. …and finally – and most importantly – The Internet and New Media.
The Internet and New Media (e.g. mobile phones or PDA’s) are perfect for direct marketing. Consumers have never had so many sources of supply, and suppliers have never had access to so many markets. There is even room for niche marketers – for example Scottish salmon could ordered online, packed and chilled, and sent to customers in any part of the world by courier.
Many companies use direct marketing, and a current example of its use, as part of a business model, is the way in which it is used by low-cost airlines. There is no intermediary or agent, customers book tickets directly with the airlines over The Internet. Airlines capture data that can be used for marketing research or a loyalty scheme. Information can be processed quickly, and then categorised into complex relational databases.
Then, for example, special offers or new flights destinations can be communicated directly to customers using e-mail campaigns. Data is not only collected on markets and segments, but also on individuals and their individual buyer behaviour. Companies such as Amazon are wholesalers of books (i.e. they do not write or publish them) – so they use Customer Relationship Management and marketing communications targeted directly at individual customers – which is another, slightly different example of direct marketing.
Direct marketing is a sometimes controversial sales method by which advertisers approach potential customers directly with products or services. The most common forms of direct marketing are telephone sales, solicited or unsolicited emails, catalogs, leaflets, brochures and coupons. Successful direct marketing also involves compiling and maintaining a large database of personal information about potential customers and clients. These databases are often sold or shared with other direct marketing companies.
For many companies or service providers with a specific market, the traditional forms of advertising (radio, newspapers, television, etc.) may not be the best use of their promotional budgets. For example, a company which sells a hair loss prevention product would have to find a radio station whose format appealed to older male listeners who might be experiencing this problem. There would be no guarantee that this group would be listening to that particular station at the exact time the company’s ads were broadcast.
Money spent on a radio spot (or television commercial or newspaper ad) may or may not reach the type of consumer who would be interested in a hair restoring product.
This is where direct marketing becomes very appealing. Instead of investing in a scattershot means of advertising, companies with a specific type of potential customer can send out literature directly to a list of pre-screened individuals.
Direct marketing firms may also keep email addresses of those who match a certain age group or income level or special interest. Manufacturers of a new dog shampoo might benefit from having the phone numbers and mailing addresses of pet store owners or dog show participants. Direct marketing works best when the recipients accept the fact that their personal information might be used for this purpose. Some customers prefer to receive targeted catalogs which offer more variety than a general mailing.
Direct marketing does have some negative aspects, however. Many people are unaware of how the personal information they include on an order form or survey may be used for targeted advertising later. One prevailing philosophy in direct mailing circles is the idea that if a customer orders a swimsuit from a clothing catalog, he or she might naturally be interested in swimming pool supplies or exercise equipment as well. This could lead to direct marketing over load, as potential customers and clients become overwhelmed with catalogs, unsolicited emails and unwanted phone calls. There is also the concern that personal information collected by legitimate direct marketing agencies could be purchased by unscrupulous or shady companies for the express purpose of fraud. Many direct marketing companies belong to self-policing associations which actively discourage fraudulent or invasive use of their databases. Legitimate direct marketing firms should also offer methods by which individuals can ‘opt out’ of these lists by request. Direct marketing agencies must respect the do-not-call list maintained by government agencies. Customers also have the right to unsubscribe to unsolicited catalogs and to block bulk emails from their in-boxes. Direct marketing can be a very cost-effective sales tool for specialized companies, as long as it is used properly and sparingly.
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