DIRECT MARKETING (LESSON1).pdf

DIRECT MARKETING MODULE 1 : How Direct Marketing Works I. INTRODUCTION A. Making a Distinction Direct Marketing Pers...

DIRECT MARKETING MODULE 1 : How Direct Marketing Works I. INTRODUCTION A. Making a Distinction Direct Marketing Personal Selling It is the action of selling products or It is the type of setting where a sales services directly to the public rather person tries to persuade customers to buy through retailers or intermediaries. a product/ service. Involves mail, email, brochures, Involves salespeople using their skills and catalogues, flyers, data base marketing, abilities to convince the customers to buy newsletters, coupons, social media and products. texting campaigns. Can reach a massive audience. Can only reach a limited number of customers. The message is not personalized for The message can be personalized for each each customer but for a certain group or customer. market. Mainly about instant gratification Revolves around building a personal :customer may not build a trusting relationship with the customers. relationship with the brand, there is no personal touch. B. 7 Ps of Marketing Product, Price Place, Promotion, People, Process, and Physical evidence are the 7 Ps of marketing mix. The same mix can also be considered for online marketing mix as well. Below we are discussing each P and how it contributes to effective marketing strategies. 1. Product The first P, Product, refers to the goods or services that a business offers its customers. In other words, the product is the physical or intangible offering that a business sells to its customers. The Product element of the 7Ps covers product design, quality, features, and packaging. To execute successful marketing, businesses must understand their target market and ensure their products align accordingly. 2. Price The Price element of the 7Ps covers the cost of goods or services. The price is the amount of money that customers pay for a product. It is important to set a price that is both competitive and profitable. 1  DIRECT MARKETING A study by McKinsey found that businesses that set prices based on value are more likely to be successful. Pricing strategies, such as discounts, bundling, and dynamic pricing, can significantly impact consumer behavior and shape purchase decisions. Different pricing strategies can also help businesses appeal to different demographics, such as premium pricing for luxury goods. 3. Place This refers to the distribution channels of the business. It can be a physical store, an online store, or a combination of both. The goal of this P is to make the products easily accessible to customers. 4. Promotion This pertains to the communication strategies employed to make potential customers aware of and attracted to the product. The various marketing channels used for promotions include advertising, public relations, sales promotion, and ensure the message is simple, and the content is visually appealing. 5. People The people are the employees, customers, and other stakeholders who interact with a business. It is important to create a positive and memorable experience for these people. For example, ensuring customer service representatives respond politely and efficiently impacts customer satisfaction levels. 6. Process The Process element of the 7Ps refers to the procedures and steps involved in delivering a product or service to the end-user. It is important to streamline the process and make it as efficient as possible. 7. Physical Evidence Lastly, this element of the 7Ps refers to the tangible aspects of a product, including packaging, branding, and more. Ensuring the tangible aspect of a product aligns with the customer’s perception of the brand is essential in setting the business apart from competitors. C. 8 Traditional Marketing Methods 1. Handout A handout is a printed document like a flyer or brochure that can promote a business, event or sale. You can create these flyers to display in public areas that community members regularly visit to tell them about promotional events taking place at your establishment. Brochures can provide details about a company or explain the features of a product, which you can distribute at events or when visiting clients. Potential customers may keep these handouts with them or store them for later reference when they want to learn more about a company product. 2. Billboard You can typically find billboards along highways or major roads. They display advertisements and company graphics. Billboards typically feature images with supporting text that convey a brief but memorable 2  DIRECT MARKETING message to the audience as they drive. Creative billboard advertisements can make it easier for your audience to recognize and remember your brand. Billboards often reach wide audiences from various locations, which can be beneficial if your goal is to gain local or national brand. 3. Direct Mail Direct mail marketing sends print materials like letters or postcards to the addresses of potential customers living in your target area. You can send direct mail to people who have expressed interest in the company or its products. Another option is to send direct mail items to community members who live close to the business. These direct mail materials build their awareness of the company and help customers realize how conveniently close their home is to the business. Many companies, like nonprofit or fundraising organizations, use direct mail as an emotional marketing tool. They may use letters to introduce their company and the cause they support. This approach can create a personal connection between the recipient and the organization. 4. Print Ads Print advertisements allow you to reach more prospective customers through outlets like newspapers or magazines. If you're hoping to build more awareness in the community, showcasing advertisements in the newspaper can help others learn more about the brand, its location and its products. Consider determining the types of magazines or reading materials your target audience typically reads, and place your advertisements in these materials to generate more sales leads. 5. Event Marketing With event marketing, you can create advertising materials to showcase at industry events, like seminars, conventions or conferences. Try creating booths and larger materials like signs or banners to attract attendees and teach them about the company and its products. Consider setting up similar booths at other local events, like fairs or festivals, to gain local attention as well. You can also participate in sponsorships to increase your brand recognition and awareness. 6. Broadcasting Another way to gain either local or national recognition is by making commercials for radio and television. You can make and sell creative ads that help customers learn more about your brand and products. Hearing or seeing these broadcasted advertisements might intrigue listeners and viewers and lead them to research the company or contact you to learn more. 7. Cold Calling It is also called telemarketing. This type of marketing applies to companies that sell their products or services over the phone. Both business-to-business (B2B) and business-to-consumer (B2C) companies can utilize cold calling. Implementing a cold-calling strategy allows you to interact with potential customers to explain the product you're selling and how it can solve any challenges that they or their company face. This strategy allows you to build a personal connection and establish trust between the company and prospective customers. 3  DIRECT MARKETING 8. Product Placement Product placement is a form of advertising in which a company prominently displays its product or brand product within the context of a television show, movie or another form of media. The goal is to create a subtle association between the product and the entertainment content, in the hopes that viewers will be more likely to purchase the product. Some marketers refer to product replacement as embedded marketing, brand integration or branded entertainment. D. Advantages of Traditional Marketing 1. Audience Growth Options like TV, radio and billboards can reach consumers in new markets and diverse geographic locations. More localized efforts such as flyers, direct mail and print ads can also engage consumers in a specific geographic area. 2. Reusable Materials Companies can often reuse the same flyers, TV ads or radio ads, such as an advertisement that runs every year during a specific holiday season. This way, they can save time and money while still promoting the business. 3. Credibility Consumers associate traditional marketing with larger company budgets, which signals a brand's longevity, growth potential and financial stability. Consumers may be more willing to purchase from companies that they associate with these qualities. 4. Brand Exposure A multimedia traditional marketing campaign is a great opportunity to improve brand recall among consumers and increase familiarity with the company's mission, values and products. 5. Trustworthiness Certain consumers might view traditional marketing methods as more trustworthy if they have less experience with online platforms. E. Disadvantages of Traditional Marketing Despite its advantages, traditional marketing may present drawbacks. Being aware of the following disadvantages may help you anticipate and address potential challenges: A. Cost While some reusable traditional marketing methods can save money, paying for ad space and printing ad materials can be costly. Considerations about which demographics are likely to respond to which types of traditional marketing can result in more strategic and cost-effective marketing plans. 4  DIRECT MARKETING B. Less Clear KPIs Key Performance Indicators are metrics that marketers use to gauge audience engagement with an advertising campaign. Because traditional marketing doesn't offer immediate insights into consumer behavior, marketing teams can establish other benchmarks to gauge effectiveness, such as measuring new customers gained or products sold since the campaign's launch. C. Less Segmentation Since they can't target their ads as precisely, traditional marketers may benefit from focusing their efforts on a broad awareness of the company's values and products. D. Less Adaptable Once a company records or prints an ad, it's time-consuming and expensive to make changes. Since traditional marketers can't update their materials quickly, they often focus on content that stays relevant for an extended period. II. DIRECT MARKETING DEFINED Direct Marketing is a form of communicating an offer, where organizations communicate directly to a pre- selected customer and supply a method for a direct response. It is also known as direct response marketing to practitioners. By contrast, advertising is of a mass- message in nature. Intended targets are selected from larger populations based on vendor-defined criteria, including average income for a particular Zip Code, purchasing history, and presence on other lists The goal is "to sell directly to consumers" without letting others "join (the) parade." A. Development of Direct Marketing In the 1980s we saw the rapid growth of direct marketing in the financial services industry, and the adoption of the discipline across the whole of business to business. Today, we see fast-moving consumer goods (FMCG) companies, retailers, multi-national industrial conglomerates and the successful dot com companies, in fact every type of organization, using direct marketing to acquire and develop customers. B. The New Terminology Today it is not so fashionable to say ‘direct marketing’ – now we are supposed to say ‘customer relationship marketing’. Data analysis has become ‘data mining’ and a centralized database has become a ‘data warehouse’ – except, of course, a database is now a ‘customer relationship marketing system’. Luckily for newcomers, and perhaps some experienced practitioners too, whilst the terminology changes almost daily, the principles have not really changed that much. Even the good old ‘Ladder of Loyalty’ circa 1954 has had its name changed to the ‘Pyramid of Propensity’. 5  DIRECT MARKETING C. The World Wide Web This is the big new factor that is going to change things forever. As the technology becomes more user-friendly, and of course more familiar as the television set becomes the central household information system, we will see a huge increase in online communication and commerce. Crucially, this will mean a dramatic change in the balance of power as customers start to select what information they are prepared to receive and in what format. Of course, many of the early e-commerce companies will not survive. However, the Internet will not go away. It will become a central part of any company’s communications with customers and prospects. There are many good new business models to follow and we need look no further than Dell, Novell, Federal Express and UPS to see examples of how the Internet can enable major changes in business practices and economics. More of this in Chapter 8. Meanwhile, let’s turn to the 1990s. In the early 1990s, after record-breaking losses, IBM had a change of management right at the top. One of the main problems was that the managers of IBM had become too remote from their customers. The new CEO Lou Gerstner is reported to have issued a decree to all his marketing people around the world saying, in effect: ‘Within 3 years at least 50% of all your marketing money must be spent on direct marketing – or you’re out of a job.’ The direct marketing trade press subsequently carried a report stating that in the first 3 years under Gerstner’s leadership IBM had: reduced its sales force from 30,000 to 6000 seen sales grow 12% faster than the industry average seen its direct marketing sales grow from zero to US$10 billion per annum. No wonder that direct marketing is such a hot topic today. Everyone in marketing is talking about it. They may call it ‘integrated marketing’, ‘one- to-one marketing’, ‘customer relationship marketing/management’, ‘loyalty marketing’, ‘personal marketing’, ‘database marketing’ or some other buzz phrase, but what they are talking about is the fact that all marketers now have to include direct marketing skills in their armory. 6  DIRECT MARKETING Even in its current form, direct marketing has been around for a long time, but it has really been with us since marketing began. Hundreds of years ago, a manufacturer of, for example, clothing or fine tableware, would use one- to-one marketing methods, seeking out selected customers, identifying their precise needs, and developing specific products to satisfy those needs. After the first round of one-to-one marketing, came mass production, which, successfully it must be said, adopted the ‘this is what we make, now go and buy it’ approach. But today, as customers have become more affluent and more individualistic, they have also become more knowledgeable and more discerning, and the ‘broad brush’ approach does not work so well any more. One of the reasons for IBM’s change of fortunes in the early 1990s was Gerstner’s abandonment of its former policy, quoted by one of their senior executives as ‘We make, you take; we talk, you listen’. This policy would be commercial suicide today. Happily, today’s marketers have modern technology to help them deliver the more focused communications and service required whilst still dealing with a high volume of customers and prospects. One expert recently defined direct marketing as ‘Using tomorrow’s technology to deliver yesterday’s standards of service to today’s customers. 7