TYBMM - SEM VI

DIRECT MARKETING CHANNELS

Direct marketers can use a number of channels for reaching individual prospects and customers. These include face-to-face selling, direct mail, catalog marketing, telemarketing, TV and other direct-response media, kiosk marketing, and e-marketing. 1. Face-To-Face Selling The original and oldest form of direct marketing is the field sales call e.g. Eureka Forbes, Real Value - Ceasefire. Today most industrial companies rely heavily on a professional sales force to locate prospects, develop them into customers, and grow the business; or they hire manufacturers' representatives and agents to carry out the directselling task addition, many consumer companies use a direct-selling force: insurance agents, stockbrokers, and distributors working for direct-sales organizations such as, Oriflame, Avon etc. 2. Group Selling A. Exhibitions and Trade Shows Exhibitions are a hybrid medium. Some exhibitions are like broadcast media advertising. The aim is merely to put products on show to a large number of customers and excite their interest. Many national consumer exhibitions are of this kind. There may be a direct marketing component. You can ask consumers showing interest to give their name and address to stand staff. These can then be distributed to local dealers for follow-up, or customers may receive a mail-shot to sustain their interest and trigger a visit to an outlet where they can buy. Increasingly, especially in business to business, exhibitions are used as an integral part of the contact strategy. Prospective or existing customers are targeted through your database or rented lists. They are invited to the exhibition and perhaps asked to confirm their attendance. An appointment with stand staff may even be booked. After the exhibition, depending on the success of the visit, there may be a follow-up contact (sales force, telephone or mail). You should use exhibitions when: Sales calls are expensive and you want to get many customers visiting you rather than you visiting them; You want to attract new customers and the exhibition has proven quality attendance. In this respect, the exhibition functions like a rented list; Complex concepts are being demonstrated, so instead of individual demonstrations having to be mounted all over the country, many customers can see the demonstration in one location. e.g. Opel, Honda, Tata, Consumer Durables B. Sales seminars and other company-sponsored special events These include the following: o the straightforward sales seminar, where a concept is described and perhaps audio-visual techniques are used to demonstrate it in action;

TYBMM - SEM VI o the physical demonstration of the product, often held in your sales office or at the factory; o awareness and training events, where your aim is to educate customers so that they can appreciate the value of your company offering. This is the 'soft sell' approach; o entertainment, e.g. visits to sporting and cultural events. Here your aim is to reward your customer for loyalty and to further cement the relationship. All these have much in common with exhibitions from a direct marketing view point. The difference is that, being sponsored by you, all those attending must be invited by you or your business partners (very common in business-to-business marketing). To ensure the right quality of attendee, direct marketing is the medium most commonly used to market such events. E.g. British Airways, Timeshare Club selling. 3. Direct Mail Direct-mail marketing involves sending an offer, announcement, reminder, or other item to a person. Using highly selective mailing lists, direct marketers send out millions of mail pieces each yearletters, flyers, foldouts. Direct mail can be used effectively in both acquisition & retention. Direct mail personalization is very common. Today, nearly every mailing to a-firm's prospects and customers has the name of the target person, along with his or her address. The days when direct marketers sent mailings with envelopes addressed "To the resident" are nearly gone. This personalization is possible because of computing power & massive database that contain names & addresses. Sophisticated computer programs massproduce personalized mails by feeding names & addresses onto letters and other pages such as those in magazines. This creates the illusion of a personal contact between the seller and a target market e.g. ICICI, HDFC, Citibank, Readers Digest Direct mail is flexible because of its ability to customize a message based on the audience it is appealing to and the circumstances under which that appeal is being made. As a medium, the mails have no fixed audience parameters. Unlike other media, such as television, radio, magazines, and newspapers, direct mail is not constrained in how it defines the scope and location of its target audience. Thus, the mailer, not the medium, determines the nature and size of any direct-mail effort. Direct mail has no editorial environment. Its commercial message is not read incidentally as with an advertisement in a magazine. Some mailings look like offers, while others are disguised to appear to be something else. Many prospects have opened a direct-mail piece thinking it was an important notice from a bank or some urgent message from the government only to find that the envelope contained an offer for a new magazine or insurance plan. Direct mail obtains higher response rates than any other medium used in direct marketing due to its ability to be personal, selective, and flexible and to deliver a custom message free of competing advertising to a specific individual or household. Mailboxes may be clogged with many items, but the items are opened one at a time. Although many direct mail pieces are discarded because they are 2

TYBMM - SEM VI seen as junk, what is read still pulls a larger response than that of any other medium. Thus, the advantages of direct mail are as follows: Selectivity Personalization Flexibility Isolation Response rates 4. Direct- Response Television Commercials Today's revolution in direct marketing is most evident in the way direct-response commercials look, implying that the audiences react mainly to the creative approach of what they see. However, like any other form of advertising, direct-response commercials seek to communicate with members or target markets - benefits are described, a set of supporting reasons for why the product delivers those benefits is explained These reasons establish the credibility of the product and the offer and may be linked to attributes of the product such as how it works or how it is made or designed. Credibility is often derived from demonstrations and testimonials. Direct-response advertisements are designed to provoke a specific action from the prospects. The object may to be the viewer to place an order by calling a number or, less frequently, to write for more information, e.g. Asian Skyshop, TSN. Most direct-response television advertisements are 60 seconds long, but some are only 30 seconds. The former gives the advertiser enough time to grab the viewers attention, explain the product, and provide ordering information. Those commercials must be shown repeatedly because one 60-seeond exposure seldom reaches many members of the firm's target audience or convinces the ones it does reach to place an order. The most successful commercials offer a bargain, guarantee satisfaction and make the product easy to order. Each of these reduces the risk the consumer may perceive in placing the order by making the shopping experience easy, convenient, safe and economical. Direct-response television offers produce 60-to-80 percent of the-orders via toll-free phone, with the rest coming in by mail. Toll-free numbers connect the caller with phone centers that handle incoming calls they generally operate seven days a week and are staffed to handle the anticipated phone volume. 5. Direct Response In Print Media. Magazines and newspapers convey messages on printed pages to mass audiences or highly segmented audiences, depending on which specific publication is selected. Direct marketers benefit from prints in the following ways Longer shelf life compared to direct mail Pass-along readership potential Regional and demographic segmentation

TYBMM - SEM VI Print also allows direct marketers to widen their customers base to non-mail order buyers. Making magazine and newspapers advertising work. Direct-response magazine and newspapers space advertising must ask the reader to do something. To make a sale, the advertisement must present enough information to stimulate a purchase decision or generate an inquiry, which will be followed up by mail or a personal sales call. e.g. Asian Paints, Berger Paints, McDonalds, Dominos, Outlook, The Week. Magazines and newspapers that contain a heavy volume of direct-response advertisements usually outperform those that do not have many such advertisements. This is probably true because particular magazines or newspapers have readers with a positive attitude toward direct marketing activities. There are two broad objectives while preparing a direct marketing strategy: Acquisition - In media planning, for customer acquisition, the need is to locate, identify, & directly contact potential customers in the target market. The core aim of such campaigns is to recruit maximum number of target customers at the minimum cost. Retention - In retention, the relationship with the customer deepens & the organization can begin to record data on preferences & habits. At this stage the choice of communication media can be customer defined. Improving cost efficiency & effectiveness in interaction with the customer is important. Reduce the customer paper cycle & treat more valuable customers differently by contacting them directly through telemarketing. 6. Catalogs The word catalog has been derived from the Greek word 'Katalogos', meaning 'to list' The use of the word list may seem rudimentary, but even today catalogs are most often both visual and verbal listings of products for sale. Products are pictured with informational copy designed and worded to entice the reader to buy. Sophistication of design, photographs, art, ink, and glossy paper have transformed the original unadorned 'list" into one that is fully customized and ready to entertain, educate, and sell with the flip of a page. The first catalog, a listing of books, was produced in Europe in the 15th century. In America, Ben Franklin, the first postmaster of the United States, produced the first version of a mail-order catalog in 1744. It was a listing of several hundred books. That catalog was a natural outcome of Mr. Franklin's profession as a postmaster and publisher. In those days m America, postmasters could send any type of printed matter through the mail, at no charge. Types of catalogs Catalogs are first classified according to whether they are for consumers or business organizations Consumer catalogs have mass circulations, while business catalogs have much lower circulations.

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Consumer catalogs are distinguishable by the types of items they carry, the target markets they want to reach, and the quality of their appearance and design. While some consumer catalogs are designed to generate retail store traffic, the majorities are from firms that concentrate almost exclusively on catalog sales. Specialty catalogs dominant today's consumer catalog landscape. They are the fastest growing part of the catalog market and far outnumber the few remaining general merchandise catalogs. The specialty catalogs, which carry items ranging from clothing to food, are designed to cater to specific tastes associated with lifestyle preferences, including differences in interests, activities, attitudes, and values. e.g. Tour operators, Titan, Tanishq Business-to-Business catalogs sell such items as office supplies and computer accessories. They usually carry specific types of items such as paper products or electronics as opposed to a general selection. The catalogs are mailed often to a select list of prospects or to those buyers who have placed an order during a fixed period of time. Over the last decade, business-to-business catalogs have come to look more and more like consumer catalogs with their emphasis on colorful, well-designed merchandise displays and motivational sales copy. e.g. Omega Stationery, Anupam Stationary, Kores, Siemens. 7. E-mail and the Internet The Internet provides marketers with the ability to interact with people far more. Its main benefits to the direct marketer include the complementary use besides other more classic direct marketing methods to supply further information. It also provides a platform for information on benefits and services for any new potential prospects and a means to apply online or request more information, ask questions or register online. It can be refreshed regularly and cheaply, which can be far more efficient than updating a catalogue. Banner ads can be placed on complementary sites to attract your chosen target audience to your site to increase response to tactical offers, as well as e-mail marketing to raise awareness of your campaigns and offers. The Internet, due to its progressive and innovative nature, lends itself well to similar approaches. Therefore creativity and interactivity are key to achieving and maintaining cut-through in this highly competitive medium. e.g. Amazon.com, Bazee.com, Redifff, Yahoo. 8. Telemarketing and m-commerce Telemarketing involves the use of the telephone and call centers to attract prospects, sell to existing customers, and provide service by taking orders and answering questions. Telemarketing helps companies increase revenue, reduce selling costs, and improve customer satisfaction. Telemarketing can be an important part of an integrated marketing communication program. The telemarketing objective is to reach customers in a personalized, costeffective interaction that meets customer needs. A well-planned telephone marketing program is a carefully thought-out and controlled activity in which the persons called

TYBMM - SEM VI have been identified as actual or potential members of a firm's target market; thus, telemarketing helps build and maintain satisfactory customer relationships. The most effective telemarketing programs make use of the latest technologies, including communications hardware and software, particularly database technologies. The scope of telemarketing is limited only by the imagination of the direct marketer. Although no other marketing tool can match the cost-effectiveness, flexibility, control, and speed of the telephone, it takes more than just good telephones to get good results. A telemarketing firm must have qualified telephone operators who have been well trained in the use of the telephone as a marketing tool. This includes training in proper voice inflections, listening skills, persistence, and patience. Companies use call centers for inbound telemarketing (receiving calls from customers) and outbound telemarketing (initiating calls to prospects and customers). e.g. ICICI, Citibank, HSBC, Orange, Airtel In fact, companies carry out the following types of telemarketing: Selling, including outgoing and incoming callings Setting qualified appointments. Generating lead advertisements Surveying. Providing customer service. Advertising (Public Relations) Pursuing collections. Selling: Telemarketing based selling involves outgoing or outbound solicitations for a firm's products or services. Selling by telephone is the most profitable telemarketing application. With existing customers, it can be used to elicit reorders, sell additional products or services, or increase the volume of products purchased. It can also resell inactive customers, identify new prospects, and handle smaller customers that are not profitable to sell in person. Incoming or inbound telemarketing must be used in conjunction with some other method of promotion such as direct-response television advertising, print placements, or direct mail. In this role, telemarketing primarily involves order taking because the buyer sees an offer and calls to place an order. Setting Qualified Appointments Setting qualified appointments involves calling prospects, qualifying them, and setting appointments for sales people. Sales people have a variety of duties, they must perform as part of their jobs, including preparing and giving face-to-face presentations, writing proposals, and completing paperwork. As a result, they may have relatively little time to prospect actively for new customers. A trained telemarketer who does little else besides set appointments for salespeople usually becomes more and more proficient and can often outperform salespeople in this role. Even though salespeople may have much more knowledge about the firm's product line, telemarketers can do better

TYBMM - SEM VI because of their concentrated focus on prospecting. Without the burden of prospecting salespeople are free to spend more time selling, which sharpens their selling skills and improves their closing ratios. Generating lead advertisements A lead-generating program provides a source of information about prospects who have expressed an interest in the product or service offered by a firm. As a result, the prospect is contacted by a sales representative or is sent more information to stimulate a sale. To ensure the success of lead-generating programs, the firm needs to manage a database of every lead. Sales representatives should fill out a contact form after each appointment and each follow-up call. Data from these forms Become part of the database. Outbound telemarketing is only as effective as the prospect list it uses. A firm can have its best product or service in the market place, but only a list of target market members who are good prospects to make a purchase, will result in a successful campaign. Therefore, it is imperative that the names of those telephoned are carefully selected. These lead advertisements may be either customers with whom the firm already has a relationship or people who fit the profile of the firm's existing customers and therefore should have a propensity to buy. Surveying Some firms use telemarketing surveys to gather market data about customers and prospects, including information about who makes the decisions in the household or business, what the customer(s) product needs are, and any product purchasing plans. This activity generates lead advertisements by identifying potential candidates for future selling. The information collected through survey is entered in a database for future reference. Note, however, that the Direct Marketing Association (DMA) does not consider it appropriate to attempt to disguise the purpose of a sales call by representing it as a survey. It considers such a misrepresentation an unethical practice and actively tries to discourage it. Providing customer service When telemarketing is used in connection with a customer service function, customer call, for example, to inquire about where their order is, to complain that they have received the wrong products, or to report that their shipment has been damaged. After solving the customers problem, the customer service representative may take the opportunity to announce new products or product modifications, along with price information. Advertising (Public Relations) Advertising that serves public relations function involves calling companies or individuals that could benefit from a firm's products or services and describing the opportunity to them. Such calls are scripted in much the same way as general advertising copy. The caller communicates information about a new product or service or a modification to an existing product or service. No sales attempt is made on this

TYBMM - SEM VI kind of call because it just informs the other party of something he or she should find of interest. Pursuing collections Credit department telemarketing does not sell a company's products or services. Rather, it pursues receiving payment. Collections are an often the overlooked aspect of telemarketing. The credit department's phone-related activities also include credit verifications. 9. Inserts Many publications offer to place flyers, inserts for direct marketers. Some readers find it irritating but many respond well as they are the first thing in the journal that they see & thus have an effective impact. Most inserts outperform sales advertisements but they tend to be three to six times more expensive depending on the quality of production. For a direct marketer it means that your message is isolated from the run of the journal & has the opportunity to stand out more effectively Prepaid reply cards & free phone response numbers make it easy to for people to respond e.g. Computer Institutes 10. Videotext and interactive TV Here the consumer's TV set is linked with a seller's catalog by cable or telephone lines Consumers can place orders via a special keyboard device connected to the system Much research is now going on to combine TV, telephones, and computers into interactive TV 11. Short messaging service (SMS) SMS is the written text service, which is sent from mobile to mobile and also, though less widely used, from PC to mobile and from digital TV set-top box to mobile. This is often called 'message to mobile'. As this channel is fairly new, it has the benefit of increased cut-through and impact on its audience who may still be receiving marketing through SMS for the first time. With SMS comes the promise of personal and local marketing that is both interactive and immediate. However, because this is an incredibly personal channel, care should be taken to ensure the message is targeted to the right person, at the right time, with the right offer, or else the message can be lost and damage done. Results have shown that the more interaction you have with the receiver, and the more value you add, the better the response. SMS communication should never be used as a stand-alone campaign. The media space is simply not robust enough to communicate on its own. However, the combined impact of brand activity and a strong timely offer through SMS can have a big impact. Mobile will enhance but not replace traditional marketing functions.