CHAPTER NO.

1
1.

INTRODUCTION

Direct marketing involves communication by a marketer to a prospect, without an intermediary, via a

medium that supports some degree of interaction. The concept has largely merged with the idea of database
marketing, which involves the establishment and maintenance of quantities of data about prospects and
customers, which is exploited in order to enhance the probability of making a sale to each of them.
Direct marketing is intrusive, both in relation to the privacy of personal behaviour, and into the privacy of
personal data. The degree of sensitivity varies greatly, depending on the person, the data and the context.
This paper examines the privacy concerns arising in relation to direct marketing. It commences by
examining direct marketing, defining the nature of privacy concerns, and showing how the privacy factor is
becoming an increasingly important business strategic factor. It then identifies specific issues arising in
relation to the various direct marketing channels, and suggests approaches that can achieve an appropriate
balance between the interests of marketers and individuals. Finally, it addresses the question of regulatory
measures.
1.1

INTRODUCTION ABOUT DIRECT MARKETING

If a person is a Citibank, Visa or Master card holder, living in a metro or class one town, by now he would
probably be accustomed to receive some unexpected mail inviting him to a launch function of a new
product, a live demonstration of a gadget, an exhibition of designer jewellery or a music concert sponsored
by some business firm. He may also get some promotional literature about an investment scheme or some
share application forms for public issues of companies, or be offered a hefty discount on subscription of a
magazine or an early bird incentive on booking a residential flat.
Even in the class two and smaller towns, people are getting surprise gifts and greeting cards on occasions
like anniversaries, birthdays and the new year. This is an indication that direct market is catching up in the
post-liberalization ere in India. Several firms, otherwise marketing their products through conventional
channels, are now also using the direct approach to communicate with and retain their customers. Different
firms use different methods to zero in on the prospects included in their hit lists.
Direct marketing as a concept has evolved to its present-day form through various stages of transformation.
Originally a form of marketing in which goods moved from producer to consumers without involving
middleman, firms selling directly to the end users through their own retail outlets and / or salespersons were
said to be involved in direct marketing. With the development of other form of personal communication,
such as the telephone, direct marketing was redefined.
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According to the Direct Marketing Association of the USA (as quoted in Kotler 1991), Direct Marketing is
an international system of marketing which uses one or more advertising media to effect a measurable
response and/ or transaction at any location.
Direct Marketing thus includes any activity whereby firms reach the customer directly as an individual, who
responds to them directly. It differs from conventional marketing in the sense that it talks directly to the
prospect on a one- to-one basis without involving any intermediary. Direct Marketing programs are usually
designed to achieve a measurable result in a relatively short duration of time. These differ from other
promotional activities, though they may use the same media or sometimes the same techniques, such as
coupons and samples.
In the absence of conceptual clarity, direct marketing is often defined very narrowly as a synonym of some
simple specific function such as direct selling, mail-order selling or direct distribution. In fact, it is much
more than all these. A complete system of integrated functions aimed at satisfying customer needs more
effectively, it is by no means a short-term quick buck affair.
In conventional marketing, firms wait for the customer to walk into their stores, whereas in direct mode
firms prefer to go out ad get the customer before he steps out of his home. It is a very focused activity that
follows a firm to concentrate on a chosen segment of customers and interacts with them more effectively
through different media. Being a more precise and goal-oriented activity it is more suitable for firms
operating in specific niche markets.
According to the number one direct-selling firm in the world, Amway Corporation of the USA (estimated
sales for 1995US$6.3billion), Direct selling moves products from the manufacturer/supplier to the seller
and consumer without intermediaries. It differs from direct marketing in the sense that direct marketing
companies depend more on mailing, catalogue sales, direct response and coupon sales, telephone and
telemarketing and the like; and now they are also selling via computer networks such as the Internet. In
contrast, direct selling is always performed through the salesperson.(As quoted at the CII-Amway
Seminar1996).
In direct marketing goods move from
Manufacturer

Consumer

In direct selling goods move from

Manufacturer

Distributor

Consumer
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Some newer forms of direct selling such as multiplayer marketing (MLM) may involve different layers of
distributors and salespersons selling to the customers directly. Amways definition notwithstanding, direct
selling as a concept is nothing more than a mode of direct distribution.
The early practitioners of direct marketing in India include Readers Digest magazine, Bullworker exerciser,
and some regional language publications that used mail coupons to increase circulation. Of late, catalogueshopping firms such as Burlingtons have also made forays into the Indian market, but achieved only limited
success. However, in the late1980s, it was the success of Eureka Forbes vacuum cleaners and Real Value
Appliances Cease Fire brand of fire extinguishers (will you call it direct marketing or direct selling?) that
signaled the dawn of direct marketing in India.
At the professional level, the credit of pioneering direct marketing in India goes to the media person Ram
Nathan Sridhar who founded O&M Direct in 1987, exclusively to handle and promote direct-marketing
activities in a professional manner. Since then, he has been selling the idea of direct marketing to savvy
marketers with missionary zeal and spirit.
Today, all major advertising agencies in the country such as Hindustan Thompson Associates (HTA), Lintas,
Mudra, Trikaya Grey, Response, Contract and many others have set up separate divisions to cope with the
growing demand for direct marketing. Presently, direct marketing accounts for only about 14 percent of the
Rs 45,000 million Indian ad spend, but going by the current trend of 35 percent annual increment in
expenditure on direct marketing, it is going to be a big business in the next couple of years.
According to the official definition of the Direct Marketing Association (DMA), direct marketing is an
"interactive system of marketing which uses one or more advertising media to affect a measurable response
and/or transaction at any location." While there are many other possible definitions, the DMA captures the
four basic concepts that set direct marketing apart from traditional marketing.
The notion of interactivity, or one-to-one communication between the marketer and the prospect or
customer, is one factor that distinguishes direct marketing keting from general advertising and other types of
marketing. Direct marketing makes an offer and asks for a response. By developing a history of offers and
responses, direct marketers acquire knowledge of their prospects and customers, resulting in more effective
targeting.
Measurability also sets direct marketing apart from general advertising and other forms of marketing. Direct
marketers can measure the response to any offer. Measurability allows direct marketers to test a variety of
lists, offers, mediavirtually any aspect of a campaignin order to allocate marketing resources to the most
effective combination of elements.
Direct marketing uses a variety of media, including mail, magazine ads, newspaper ads, television and radio
spots, infomercials (also television but longer format), free standing inserts (FSIs), and card decks. This
3

flexibility allows direct marketing to provide interactivity and measurability and still take advantage of new
technologies. By being adaptable to virtually any media, direct marketing will lead marketers into the
twenty-first century as interactive television, the information superhighway, and other new technologies
become a reality.
Finally, in direct marketing, the transaction may take place at any location and is not limited to retail stores
or fixed places of business. The transaction may take place in the consumer's home or office via mail, over
the phone, on the Internet, or through interactive television. It may also occur away from the home or office,
as at a kiosk, for example.
It is necessary to distinguish direct marketing from direct mail or mail-order businesses, although direct
marketing encompasses those two concepts. Direct mail is an advertising medium, one of several media that
direct marketers utilize. Mail order is a distribution channel, as are retail outlets and personal selling.

The Direct Marketing Association (DMA) defines direct marketing as follows:

Direct marketing is an interactive marketing system that uses one or more advertising media to affect
a measurable response and /or transaction at any location.
This definition emphasizes a measurable response; typically a customer order. Thus direct marketing is
sometimes called direct-order marketing.
Today, many direct marketers see direct marketing as playing a broader role, that of building a long-term
relationship with the customer (direct relationship marketing). Direct marketers occasionally send birthday
cards, information materials, or small premiums to select members in their customer base. Airlines, hotels,
and other businesses build strong customer relationships through frequency award programs and club
programs.
According to the direct marketing association of the U.S.A (as quoted in Kotler 1991 ), Direct
Marketing is a international system of marketing which uses one or more advertising media to effect a
measurable response and/ or transaction at any location.

1.2 WHAT IS DIRECT MARKETING

Direct Marketing is an interactive mode of marketing through which the marketer reaches out to his target
market at any location. . An analysis of this definition brings out three key elements, namely:
1) It is an interactive system in the sense that there is a two-way communication between the marketer
and his/her target market; the response or non response of the customer completes the
communication loop in the direct marketing programme. For example, when the customer fills in the
response coupon in an advertisement or a catalogue and mails it, he/she communicates to the
marketer and hence completes the communication loop.
2) Another element is measurability of response. As mentioned above the number of coupons received
indicates the response rate to the marketers communication.
3) Direct marketing activities are not location specific; it is not necessary for the customer to physically
interact with the marketer, he/she can establish a contact through mail, phone, fax, or the internet.
As mentioned above, direct marketing is an efficient way to promote and sell products and services in a
highly competitive market. The goal of direct marketing is always a response
from the customer. Direct marketing has also been known by other terms like direct selling, mail order
selling or catalogue selling.
Today direct marketing uses all these tools and is based on a customer database. In fact the key to successful
direct marketing is the development of this database.
Direct marketing is just what it sounds like - directly reaching a market (customers and potential customers)
on a personal (phone calls, private mailings) basis, or mass-media basis (infomercials, magazine ads, etc.).
Direct marketing is often distinguished by aggressive tactics that attempt to reach new customers usually by
means of unsolicited direct communications. But it can also reach out to existing or past customers. A key
factor in direct marketing is a "call to action." That is, direct marketing campaigns should offer an incentive
or enticing message to get consumers to respond (act).
Direct marketing involves the business attempting to locate, contact, offer, and make incentive-based
information available to consumers.
Direct marketing occurs when the producer connects with the end user. The end user may be a consumer
or a business.

Direct marketing applies to product and service-oriented businesses, and to nonprofits organizations. In all
situations, there is no intermediary involved. Direct marketing describes this interactive communication with
the end user.
Direct marketing is not synonymous with mass marketing. The most effective direct marketing takes place
when there is a clear connection to reach the target market.
Organizations may use several ways to leverage direct marketing as they communicate with and deliver
products to their customers. This may include using a direct sales force, catalogs, websites, email, direct
mail, telemarketing, seminars, trade shows, and other one-to-one techniques to communicate and sell to
their customers and clients.
Some of these direct marketing methods have grown dramatically, especially with the growth of marketing
over the Internet. There is evidence that other direct marketing approaches have diminished, such as reports
that the response to direct mail is often below one percent compared to the five percent+ response rate
numbers more commonly experienced in the past.
Any medium that you choose to use to communicate directly to your prospects is being employed in direct
marketing. These 5 methods are examples of direct marketing that you can use to obtain prospects and
increase sales for your business.

1.3 MEANING OF DIRECT MARKETING

Direct Marketing is the interactive use of advertising media, to stimulate and (immediate) behaviour
modification in such a way that this behaviour can be tracked, recorded, analyzed, and stored on a database
for future retrieval and use. Direct marketing is a sub-discipline and type of marketing. There are two main
definitional characteristics which distinguish it from other types of marketing. The first is that it attempts to
send its messages directly to consumers, without the use of intervening media. The second characteristic is
that it is focused on driving purchases that can be attributed to a specific call-to-action. This aspect of
direct marketing involves an emphasis on trackable, measurable positive responses from consumers
regardless of medium.

1.4 WHY DIRECT MARKETING?

The growth of direct marketing in India can be attributed to environmental complexities and the concept of
bargaining power. Customer life styles have changed especially in metros and large cities. Todays customer
looks for convenience in shopping and getting the product or service delivered in the comfort of his/her
6

house. Teleshoppings, home shopping channels, catalogue marketing and online shopping are some of the
tools that enable companies to cater to this core customer value.
Globalization of markets and the internet direct marketing. Today a firm have further facilitated the growth
of need not have operations in all its markets but can still cater to the world demand. Dell computers and
Amazon are two leading examples of successful direct marketing around the world.
Today the cost of a retail shelf at outlets in major cities is prohibitive. Fragmentation of media and audiences
also imply higher advertising budgets. With customer loyalty on the wane and the costs of marketing
increasing, firms margins have come under pressure. Productivity of marketing resources is now as much of
a concern as that of any other resource. Direct marketing helps
Direct marketing may not be for everyone. It can be very labour and time intensive. It can also be socially
Demanding and may not fit your product mix. Cash flow can be uncertain. However, there are several
reasons to consider direct marketing:
Direct marketing allows you to set the price of products;
Products are sold closer to retail prices, capturing more of the food dollar or overall value;
Regular sales increase liquidity and regular cash flow;
Most products do not need to be sized or graded and can be sold in small quantities;
Customers give you feedback on your products and may generate ideas for new ones; and
Customers get to know you and may develop loyalties to your products and items.
Direct marketing is also a means of diversifying your markets by having more than one outlet for sales and
helping
You to manage your farms overall market risk.

1.5 WHY GO FOR DIRECT MARKETING?

Over the years direct marketing has gained unprecedented proportions. It has grown into a fully fledged
sector and is a growing industry everywhere in the world. People everywhere are associated with direct
marketing. Lots of people are working, either part-time or full-time and making much out of it. So why at all
should we go for direct marketing? What are the merits? Let's examine:
It provides an excellent opportunity to interact with people and widen our horizons, in term of social
interactions.
It offers the most flexible of working schedules so that you can weave it all into your busy schedules.
It can be done on a part-time basis, thus giving you an extra-income. You can also choose it as a fulltime thing and make the most out of it.
7

 It gives you the opportunity to bring out the marketing professional in you and to hone your skills in
the best possible manners.
It helps you set goals for yourself and set out to accomplish the same within a limited span of time.
It lets you be an owner and even have people working for you.
It helps you think of new, innovative ideas and bring out the strategist in you.
All this and much more are the benefits of Direct Marketing, which is perhaps destined to be the marketing
mode of the future.

1.6 HOW DIRECT MARKETING WORKS

Direct marketing, as practiced by professionally managed firms is a four-step process:
1.
2.
3.
4.

Identifying prospects
Establishing contact
Booking the order
Maintaining contacts to develop a mutually beneficial, long-term business relationship.

Identifying prospects and segmenting them into various categories based on certain specific criteria is
critical to the success of direct marketing. This is done in different phases. In the first phase, a preliminary
list of potential or may be customers is made through random mailing, house calls, or mass media
advertisements using coupons or some other contact device. In marketing parlance it is termed cold listing.
This cold list is thoroughly scrutinized and attempts are made to identify those who are not likely to use the
proposed product or service due to incompatibility of need, income, age, sex, occupation or any other reason.
All such people who dont qualify as prospects are dropped from the list. The residual list is then known as
the hot list. Firms may sometimes seek to gather additional information about those included in the initial
list by contacting them on telephone or through other convenient media.

The next step is to draw a detailed profile of the prospect. This may include information on consumption
habits, purchase behaviour, personality and lifestyle, social class, exposure to media; and demographic
particulars such as age, income, education, profession, family size, domicile and complete postal address.
Technically this step is known as profiling the respondent or response graphic.
The list is further split into separate clusters of identical groups, using some demographic, psycho graphic or
behavioural parameters. This exercise is termed segmentation. Firms now adopt many innovative ways of

clustering, using novel parameters such as travelling habits, food preferences, ownership of automobiles,
possession of assets and durables, and taste for music and art.
Finally, each cluster is researched using some predetermined criteria, to identify the specific segment or
segments to be targeted for marketing the product. This exercise is known as targeting. If the product is a
high-value item such as jewellery, a computer or an expensive gadget, direct marketing goes into further
details and makes an elaborate study of each individual included in the target segment. This is known as
individualization. Now the firm may focus on the specific needs of the individual customer. Let us now see
how it works in actual practice.
Having identified the customer and prepared a database of individual profiles, the next step is to call at the
residence of individual prospects for live demonstration or to offer a free sample of the product. Since the
individualistic approach ensures better chances of being heard, it is far less difficult to get an order for the
product. In the afore-said example, the firm was successful not only in selling its gadget to a majority of the
host-listed respondents, but in the future too, this database may be of immense help in identifying and
targeting customers if it introduces some related product such as a blood sugar or body weight monitor, or a
self testing kit for diabetic patients.
Finally, having been able to sell the product or service to a customer. it is essential to keep in touch with
him/her through mail, telephone or any other means of communication, to retain him / her as a customer. To
create a lasting relationship, firms must maintain regular contact and update their data according to the
changing needs and tastes of the customers.

1.7 THE ROLE OF DIRECT MARKETING

In the literature, direct marketing has been treated and identified in various ways. The dominant stream of
authors of major marketing textbooks have treated direct marketing as a communication/promotion tool
(Booth 1992, Mercer 1992, Anderson 1993, Kotler 1998), and as both a marketing channel and a form of
promotion (Katzenstein and Sachs 1986, McCarthy and Perreault 1987, Stanton, Etzel, and Walker 1991,
Evans and Berman 1992). Others have identified it as a marketing strategy (Rapp 1986), and as a marketing
system (Jenkins 1984, Bauer and Miglautschs 1992).
Reasons to use and implement the direct marketing approach differ widely First, the field where direct
marketing is applied is one factor that determines the role of direct marketing. For example, direct marketing
could be used as a sole distribution channel in financial service firms. However, in retail businesses it may
be best used as a promotional tool. Second, the stage which the organisation reaches in developing direct
marketing affects the understanding of its role and use. Different marketers and firms will be at different
9

stages in its development and use. Some are still sales-oriented users. Others reach a development stage
where direct marketing is used as a communication tool that ensures and maintains a long-term customer
relationship.
The third factor is the fact that certain elements of direct marketing are best used for certain roles. As
explained in the previous chapters, direct mail is commonly used as advertising or as a promotional tool,
while mail order, on the other hand, is commonly utilised as a distribution channel. Even though they are
different in nature and use, they are both still called direct marketing.
To consolidate these views, an intensive review of the existing literature has been undertaken, out of which
two significant functions are identified as the major purposes of implementing and using direct marketing
from the supply side. These two functions are: enhancing promotional activities, and supporting distribution
channels. These functions are naturally interrelated and they overlap. It is difficult to isolate them from each
other. However, the purpose of such an artificial classification is to identify a base to which direct marketing
can be related. Since the researchs concern is the use of direct marketing from the supply side, this chapter
will discuss thoroughly the reasons for using direct marketing, and some of its roles and functions. It will
first discuss how direct marketing is related to promotion and distribution by reviewing some of the
available direct marketing literature. Secondly, it will discuss how direct marketing is used as a promotional
tool. Next, direct marketing as a distribution channel will be reviewed thoroughly, as this is going to be the
focus of this book.

1.8 DIRECT MARKETING MIX

The marketing mix in direct marketing mode, by and large, remains the same except for the communication
programme and customer service, which have acquired new meaning. For example, if the marketer
guarantees delivery of the product within a defined time frame, also promises to take it back in case it fails to
live up to customer expectations and return his/her money, then the customer service executive cannot refuse
a claim. This is opposed to general marketing where the marketing can put several disclaimers and may
refuse the customer. In direct marketing, refusal to accept customer claim without any question may cost the
marketer significant losses as he not only loses that customer but subsequent prospects as well. In general
marketing, the loss can be contained through other elements of the marketing mix. In addition to marketing
mix decisions, the direct marketer has to pay special attention to the following factors in decision making:
1) Communication Programme:
This involves both creative and media decisions. The creative decisions centre around the copy platform,
graphic design elements, mailers, stickers and so forth.
The media used by direct marketers are mailers, telephone, television and the internet. Direct response print
and television advertising are particularly effective in generating response to the offer, especially if it is
10

complex to understand. Also, the direct marketer today uses various outdoor, retail panels (Just Talk and BPL
MOTS brands of prepaid Sims cards in Mumbai) and even stickers to retain the brand at the top of
customers mind. These also serve the purpose of a reminder.

2) Customer Service:
Customer service is a key input in direct marketing. In a direct marketing, physical contact with the
customer is low, and it is the quality of service that facilitates customer decision making. Service, therefore,
is an investment and cannot be ignored. The customer service mix today involves speed and accuracy of
order fulfilment, immediate customer complaint resolution, etc.
3) Timing and Sequencing:
This factor involves determination of whether the product or service is offered once, as a part of the
campaign or continuously. This will obviously involve campaign decisions like whether to have bursts,
pulsing or a continuous campaign

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CHAPTER NO. 2
2. RESEARCH METHODOLOGY
In order to achieve the research objectives, this thesis will employ a rigorous research methodology which
will address five research principles: research philosophy, research method, research design, data collection,
and data analysis. First, a positivist stance will be adopted as the research philosophy in this thesis. This
research philosophy was adopted because of its suitability to address the research objectives. Similarly, a
qualitative approach will be adopted to analyse the findings. This approach is appropriate where the research
question is followed by How and What, as will be
Discussed in the research methodology chapter. Second, a case study method will be used to perform the
conceptual framework evaluation. Third, the research design will provide the overall structure of the thesis,
with clear guidelines and procedures on the tasks needed to complete the research aim and objectives.
Fourth, the data collection will be done from three organisations operating in the retailing,
telecommunications, and higher education sectors. The data collected will be used to evaluate the conceptual
framework performance in an organisational context. Finally, analytical strategies of the
Case study method will be used to assess each case study individually and collectively. Specifically, the
relying on theoretical propositions, using both qualitative and quantitative data, and examining rival
explanations analytical strategies will be used to examine the findings of the three case studies.

2.1 MEANING OF RESEARCH

Research in common parlance refers to a search for knowledge. Once can also define research as a scientific
and systematic search for pertinent information on a specific topic. In fact, research is an art of scientific
investigation. The Advanced Learners Dictionary of Current English lays down the meaning of research as
a careful investigation or inquiry especially through search for new facts in any branch of knowledge. 1
Redman and Mary define research as a systematized effort to gain new knowledge. 2 Some people
consider research as a movement, a movement from the known to the unknown. It is actually a voyage of
discovery. We all possess the vital instinct of inquisitiveness for, when the unknown confronts us, we wonder
and our inquisitiveness makes us probe and attain full and fuller understanding of the unknown. This
12

inquisitiveness is the mother of all knowledge and the method, which man employs for obtaining the
knowledge of whatever the unknown, can be termed as research.
Research is an academic activity and as such the term should be used in a technical sense. According to
Clifford Woody research comprises defining and redefining problems, formulating hypothesis or suggested
solutions; collecting, organising and evaluating data; making deductions and reaching conclusions; and at
last carefully testing the conclusions to determine whether they fit the formulating hypothesis. D. Slesinger
and M. Stephenson in the Encyclopaedia of Social Sciences define research as the manipulation of things,
concepts or symbols for the purpose of generalising to extend, correct or verify knowledge, whether that
knowledge aids in construction of theory or in the practice of an art. 3 Research is, thus, an original
contribution to the existing stock of knowledge making for its advancement. It is the persuit of truth with the
help of study, observation, comparison and experiment. In short, the search for knowledge through objective
and systematic method of finding solution to a problem is research. The systematic approach concerning
generalization and the formulation of a theory is also research. As such the term research refers to the
systematic method
1 The Advanced Learners Dictionary of Current English, Oxford, 1952, p. 1069.
2 L.V. Redman and A.V.H. Mory, The Romance of Research, 1923, p.10.
3 The Encyclopaedia of Social Sciences, Vol. IX, MacMillan, 1930.
Consisting of enunciating the problem, formulating a hypothesis, collecting the facts or data, analysing the
facts and reaching certain conclusions either in the form of solutions(s) towards the concerned problem or in
certain generalisations for some theoretical formulation.

2.2 OBJECTIVES OF RESEARCH

The purpose of research is to discover answers to questions through the application of scientific procedures.
The main aim of research is to find out the truth which is hidden and which has not been discovered as yet.
Though each research study has its own specific purpose, we may think of research objectives as falling into
a number of following broad groupings:
1.

To gain familiarity with a phenomenon or to achieve new insights into it (studies with this

object in view are termed as exploratory or formulative research studies);

13

2.

To portray accurately the characteristics of a particular individual, situation or a group

(studies with this object in view are known as descriptive research studies);
3.

To determine the frequency with which something occurs or with which it is associated with

something else (studies with this object in view are known as diagnostic research studies);
4.

To test a hypothesis of a causal relationship between variables (such studies are known as

hypothesis-testing research studies).

2.3 MOTIVATION IN RESEARCH

What makes people to undertake research? This is a question of fundamental importance. The possible
motives for doing research may be either one or more of the following:
1.

Desire to get a research degree along with its consequential benefits;

2.

Desire to face the challenge in solving the unsolved problems, i.e., concern over practical

problems initiates research;

3.

Desire to get intellectual joy of doing some creative work;

4.

Desire to be of service to society;

5.

Desire to get respectability.

However, this is not an exhaustive list of factors motivating people to undertake research studies. Many
more factors such as directives of government, employment conditions, curiosity about new things, desire to
understand causal relationships, social thinking and awakening, and the like may as well motivate (or at
times compel) people to perform research operations.

2.4 TYPES OF RESEARCH

The basic types of research are as follows:

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(I)

Descriptive vs. Analytical: Descriptive research includes surveys and fact-finding enquiries of

different kinds. The major purpose of descriptive research is description of the state of affairs as it exists at
present. In social science and business research we quite often use
The term Ex post facto research for descriptive research studies. The main characteristic of this method is
that the researcher has no control over the variables; he can only report what has happened or what is
happening. Most ex post facto research projects are used for descriptive studies in which the researcher seeks
to measure such items as, for example, frequency of shopping, preferences of people, or similar data. Ex post
facto studies also include attempts by researchers to discover causes even when they cannot control the
variables. The methods of research utilized in descriptive research are survey methods of all kinds, including
comparative and correlation methods. In analytical research, on the other hand, the researcher has to use
facts or information already available, and analyze these to make a critical evaluation of the material.
(Ii)

Applied vs. Fundamental: Research can either be applied (or action) research or fundamental

(to basic or pure) research. Applied research aims at finding a solution for an immediate problem facing a
society or an industrial/business organisation, whereas fundamental research is mainly concerned with
generalisations and with the formulation of a theory.
Gathering knowledge for knowledges sake is termed pure or basic research. 4 Research concerning
some natural phenomenon or relating to pure mathematics are examples of fundamental research. Similarly,
research studies, concerning human behaviour carried on with a view to make generalisations about human
behaviour, are also examples of fundamental research, but research aimed at certain conclusions (say, a
solution) facing a concrete social or business problem is an example of applied research. Research to identify
social, economic or political trends that may affect a particular institution or the copy research (research to
find out whether certain communications will be read and understood) or the marketing research or
evaluation research are examples of applied research. Thus, the central aim of applied research is to discover
a solution for some pressing practical problem, whereas basic research is directed towards finding
information that has a broad base of applications and thus, adds to the already existing organized body of
scientific knowledge.
(iii)

Quantitative vs. Qualitative: Quantitative research is based on the measurement of quantity or

amount. It is applicable to phenomena that can be expressed in terms of quantity. Qualitative research, on the
other hand, is concerned with qualitative phenomenon, i.e., phenomena relating to or involving quality or
kind. For instance, when we are interested in investigating the reasons for human behaviour (i.e., why people
think or do certain things), we quite often talk of Motivation Research, an important type of qualitative
research. This type of research aims at discovering the underlying motives and desires, using in depth
interviews for the purpose. Other techniques of such research are word association tests, sentence
15

completion tests, story completion tests and similar other projective techniques. Attitude or opinion research
i.e., research designed to find out how people feel or what they think about a particular subject or institution
is also qualitative research. Qualitative research is especially important in the behavioural sciences where the
aim is to discover the underlying motives of human behaviour. Through such research we can analyse the
various factors which motivate people to behave in a particular manner or which make people like or dislike
a particular thing. It may be stated, however, that to apply qualitative research in practice is relatively a
difficult job and therefore, while doing such research, one should seek guidance from experimental
psychologists.
(iv)

Conceptual vs. Empirical: Conceptual research is that related to some abstract idea(s) or

theory. It is generally used by philosophers and thinkers to develop new concepts or to reinterpret existing
ones. On the other hand, empirical research relies on experience or observation alone, often without due
regard for system and theory. It is data-based research, coming up with conclusions which are capable of
being verified by observation or experiment. We can also call it as experimental type of research. In such a
research it is necessary to get at facts firsthand, at their source, and actively to go about doing certain things
to stimulate the production of desired information. In such a research, the researcher must first provide
himself with a working hypothesis or guess as to the probable results. He then works to get enough facts
(data) to prove or disprove his hypothesis. He then sets up experimental designs which he thinks will
manipulate the persons or the materials concerned so as to bring forth the desired information. Such research
is thus characterised by the experimenters control over the variables under study and his deliberate
manipulation of one of them to study its effects. Empirical research is appropriate when proof is sought that
certain variables affect other variables in some way. Evidence gathered through experiments or empirical
studies is today considered to be the most powerful support possible for a given hypothesis.
(v)

Some Other Types of Research: All other types of research are variations of one or more of

the above stated approaches, based on either the purpose of research, or the time required to accomplish
research, on the environment in which research is done, or on the basis of some other similar factor. Form
the point of view of time, we can think of research either as one-time research or longitudinal research. In
the former case the research is confined to a single time-period, whereas in the latter case the research is
carried on over several time-periods. Research can be field-setting research or laboratory research or
simulation research, depending upon the environment in which it is to be carried out. Research can as well
be understood as clinical or diagnostic research. Such research follows case-study methods or in-depth
approaches to reach the basic causal relations. Such studies usually go deep into the causes of things or
events that interest us, using very small samples and very deep probing data gathering devices. The research
may be exploratory or it may be formalized. The objective of exploratory research is the development of
hypotheses rather than their testing, whereas formalized research studies are those with substantial structure
and with specific hypotheses to be tested. Historical research is that which utilizes historical sources like
16

documents, remains, etc. to study events or ideas of the past, including the philosophy of persons and groups
at any remote point of time. Research can also be classified as conclusion-oriented and decision-oriented.
While doing conclusion-oriented research, a researcher is free to pick up a problem, redesign the enquiry as
he proceeds and is prepared to conceptualize as he wishes. Decision-oriented research is always for the need
of a decision maker and the researcher in this case is not free to embark upon research according to his own
inclination. Operations research is an example of decision oriented research since it is a scientific method of
providing executive departments with a quantitative basis for decisions regarding operations under their
control.

2.5 RESEARCH APPROACHES

The above description of the types of research brings to light the fact that there are two basic approaches to
research, viz., quantitative approach and the qualitative approach. The former involves the generation of data
in quantitative form which can be subjected to rigorous quantitative analysis in a formal and rigid fashion.
This approach can be further sub-classified into inferential, experimental and simulation approaches to
research. The purpose of inferential approach to research is to form a data base from which to infer
characteristics or relationships of population. This usually means survey research where a sample of
population is studied (questioned or observed) to determine its characteristics, and it is then inferred that the
population has the same characteristics. Experimental approach is characterised by much greater control
over the research environment and in this case some variables are manipulated to observe their effect on
other variables. Simulation approach involves the construction of an artificial environment within which
relevant information and data can be generated. This permits an observation of the dynamic behaviour of a
system (or its sub-system) under controlled conditions. The term simulation in the context of business and
social sciences applications refers to the operation of a numerical model that represents the structure of a
dynamic process. Given the values of initial conditions, parameters and exogenous variables, a simulation is
run to represent the behaviour of the process over time. 5 Simulation approach can also be useful in
building models for understanding future conditions.
Qualitative approach to research is concerned with subjective assessment of attitudes, opinions and
behaviour. Research in such a situation is a function of researchers insights and impressions. Such an
approach to research generates results either in non-quantitative form or in the form which are not subjected
to rigorous quantitative analysis. Generally, the techniques of focus group interviews, projective techniques
and depth interviews are used. All these are explained at length in chapters that follow.

2.6 SIGNIFICANCE OF RESEARCH

17

All progress is born of inquiry. Doubt is often better than overconfidence, for it leads to inquiry, and inquiry
leads to invention is a famous Hudson Maxim in context of which the significance of research can well be
understood. Increased amounts of research make progress possible. Research inculcates scientific and
inductive thinking and it promotes the development of logical habits of thinking and organisation.
The role of research in several fields of applied economics, whether related to business or to the economy as
a whole, has greatly increased in modern times. The increasingly complex nature of business and
government has focused attention on the use of research in solving operational problems. Research, as an aid
to economic policy, has gained added importance, both for government and business.
Research provides the basis for nearly all government policies in our economic system. For instance,
governments budgets rest in part on an analysis of the needs and desires of the people and on the availability
of revenues to meet these needs. The cost of needs has to be equated to probable revenues and this is a field
where research is most needed. Through research we can devise alternative policies and can as well examine
the consequences of each of these alternatives.
Decision-making may not be a part of research, but research certainly facilitates the decisions of the policy
maker. Government has also to chalk out programmes for dealing with all facets of the countrys existence
and most of these will be related directly or indirectly to economic conditions. The plight of cultivators, the
problems of big and small business and industry, working conditions, trade union activities, the problems of
distribution, even the size and nature of defence services are matters requiring research. Thus, research is
considered necessary with regard to the allocation of nations resources. Another area in government, where
research is necessary, is collecting information on the economic and social structure of the nation. Such
information indicates what is happening in the economy and what changes are taking place. Collecting such
statistical information is by no means a routine task, but it involves a variety of research problems. These
days nearly all governments maintain large staff of research technicians or experts to carry on this work.
Thus, in the context of government, research as a tool to economic policy has three distinct phases of
operation, viz., (I) investigation of economic structure through continual compilation of facts; (ii) diagnosis
of events that are taking place and the analysis of the forces underlying them; and (iii) the prognosis, i.e., the
prediction of future developments.
Research has its special significance in solving various operational and planning problems of business and
industry. Operations research and market research, along with motivational research, are considered crucial
and their results assist, in more than one way, in taking business decisions. Market research is the
investigation of the structure and development of a market for the purpose of formulating efficient policies
for purchasing, production and sales. Operations research refers to the application of mathematical, logical
and analytical techniques to the solution of business problems of cost minimisation or of profit maximisation
or what can be termed as optimisation problems. Motivational research of determining why people behave as
18

they do is mainly concerned with market characteristics. In other words, it is concerned with the
determination of motivations underlying the consumer (market) behaviour. All these are of great help to
people in business and industry who are responsible for taking business decisions. Research with regard to
demand and market factors has great utility in business. Given knowledge of future demand, it is generally
not difficult for a firm, or for an industry to adjust its supply schedule within the limits of its projected
capacity. Market analysis has become an integral tool of business policy these days. Business budgeting,
which ultimately results in a projected profit and loss account, is based mainly on sales estimates which in
turn depend on business research. Once sales forecasting is done, efficient production and investment
programmes can be set up around which are grouped the purchasing and financing plans. Research, thus,
replaces intuitive business decisions by more logical and scientific decisions.
Research is equally important for social scientists in studying social relationships and in seeking answers to
various social problems. It provides the intellectual satisfaction of knowing a few things just for the sake of
knowledge and also has practical utility for the social scientist to know for the sake of being able to do
something better or in a more efficient manner. Research in social sciences is concerned both with
knowledge for its own sake and with knowledge for what it can contribute to practical concerns. This
double emphasis is perhaps especially appropriate in the case of social science. On the one hand, its
responsibility as a science is to develop a body of principles that make possible the understanding and
prediction of the whole range of human interactions. On the other hand, because of its social orientation, it is
increasingly being looked to for practical guidance in solving immediate problems of human relations. 6
6 Marie Jahoda, Morton Deutsch and Stuart W. Cook, Research Methods in Social Relations, p. 4.
In addition to what has been stated above, the significance of research can also be understood keeping in
view the following points:
(a)

To those students who are to write a masters or Ph.D. thesis, research may mean a careerism

or a way to attain a high position in the social structure;

(b)

To professionals in research methodology, research may mean a source of livelihood;

(c)

To philosophers and thinkers, research may mean the outlet for new ideas and insights;

(d)

To literary men and women, research may mean the development of new styles and creative

work;
(e)

To analysts and intellectuals, research may mean the generalisations of new theories.
19

Thus, research is the fountain of knowledge for the sake of knowledge and an important source of providing
guidelines for solving different business, governmental and social problems. It is a sort of formal training
which enables one to understand the new developments in ones field in a better way.

2.7 RESEARCH METHODS VERSUS METHODOLOGY

It seems appropriate at this juncture to explain the difference between research methods and research
methodology. Research methods may be understood as all those methods/techniques that are used for
conduction of research. Research methods or techniques*, thus, refer to the methods the researchers
*At times, a distinction is also made between research techniques and research methods. Research
techniques refer to the behaviour and instruments we use in performing research operations such as making
observations, recording data, techniques of processing data and the like. Research methods refer to the
behaviour and instruments used in selecting and constructing research technique. For instance, the difference
between methods and techniques of data collection can better be understood from the details given in the
following chart

Type

Methods

Techniques

analysis of historical Recording of notes, content analysis, tape and film

library research
field research

records
analysis

listening and analysis

of Statistical
compilations

and

manipulations,

documents
Non-participant

reference and abstract guides, contents analysis.

Observational behavioural scales, use of score

direct observation
Participant

cards, etc.
Interactional recording, possible use of tape

observation

recorders, photo graphic techniques.

Recording mass behaviour, interview

Mass observation
Mail questionnaire
Opinionative
Personal interview
Focused interview

using

independent observers in public places.

Identification of social and economic background of
respondents.
Use of attitude scales, projective techniques, use of
sociometric scales.
Interviewer uses a detailed schedule with open and
closed questions.
Interviewer focuses

attention

upon

given

experience and its effects.

20

Small groups of respondents are interviewed

Group interview

simultaneously.
Used as a survey technique for information and for

Telephone survey

discerning opinion; may also be used as a follow up

Case study and life

history

of questionnaire.
Cross sectional collection of data for intensive
analysis, longitudinal collection of data of intensive
character.

Small group study of

laboratory

random

research

play

behaviour, Use of audio-visual recording devices, use of

and

role observers, etc.

analysis
TABLE NO: 2.1 RESEARCH METHOD AND TECHNIQUES
From what has been stated above, we can say that methods are more general. It is the methods that generate
techniques. However, in practice, the two terms are taken as interchangeable and when we talk of research
methods we do, by implication, include research techniques within their compass.

Use in performing research operations. In other words, all those methods which are used by the researcher
during the course of studying his research problem are termed as research methods. Since the object of
research, particularly the applied research, it to arrive at a solution for a given problem, the available data
and the unknown aspects of the problem have to be related to each other to make a solution possible.
Keeping this in view, research methods can be put into the following three groups:
1.

In the first group we include those methods which are concerned with the collection of data.

These methods will be used where the data already available are not sufficient to arrive at the
required solution;
2.

The second group consists of those statistical techniques which are used for establishing

relationships between the data and the unknowns;

3.

The third group consists of those methods which are used to evaluate the accuracy of the

results obtained.
Research methods falling in the above stated last two groups are generally taken as the analytical tools of
research.
21

Research methodology is a way to systematically solve the research problem. It may be understood as a
science of studying how research is done scientifically. In it we study the various steps that are generally
adopted by a researcher in studying his research problem along with the logic behind them. It is necessary
for the researcher to know not only the research methods/techniques but also the methodology. Researchers
not only need to know how to develop certain indices or tests, how to calculate the mean, the mode, the
median or the standard deviation or chi-square, how to apply particular research techniques, but they also
need to know which of these methods or techniques, are relevant and which are not, and what would they
mean and indicate and why. Researchers also need to understand the assumptions underlying various
techniques and they need to know the criteria by which they can decide that certain techniques and
procedures will be applicable to certain problems and others will not. All this means that it is necessary for
the researcher to design his methodology for his problem as the same may differ from problem to problem.
For example, an architect, who designs a building, has to consciously evaluate the basis of his decisions, i.e.,
he has to evaluate why and on what basis he selects particular size, number and location of doors, windows
and ventilators, uses particular materials and not others and the like. Similarly, in research the scientist has to
expose the research decisions to evaluation before they are implemented. He has to specify very clearly and
precisely what decisions he selects and why he selects them so that they can be evaluated by others also.
From what has been stated above, we can say that research methodology has many dimensions and research
methods do constitute a part of the research methodology. The scope of research methodology is wider than
that of research methods. Thus, when we talk of research methodology we not only talk of the research
methods but also consider the logic behind the methods we use in the context of our research study and
explain why we are using a particular method or technique and why we are not using others so that research
results are capable of being evaluated either by the researcher himself or by others. Why a research study has
been undertaken, how the research problem has been defined, in what way and why the hypothesis has been
formulated, what data have been collected and what particular method has been adopted, why particular
technique of analysing data has been used and a host of similar other questions are usually answered when
we talk of research methodology concerning a research problem or study.

2.8 RESEARCH AND SCIENTIFIC METHOD

For a clear perception of the term research, one should know the meaning of scientific method. The two
terms, research and scientific method, are closely related. Research, as we have already stated, can be termed
as an inquiry into the nature of, the reasons for, and the consequences of any particular set of circumstances,
whether these circumstances are experimentally controlled or recorded just as they occur. Further, research
implies the researcher is interested in more than particular results; he is interested in the repeatability of the
22

results and in their extension to more complicated and general situations. 7 On the other hand, the
philosophy common to all research methods and techniques, although they may vary considerably from one
science to another, is usually given the name of scientific method. In this context, Karl Pearson writes, The
scientific method is one and same in the branches (of science) and that method is the method of all logically
trained minds the unity of all sciences consists alone in its methods, not its material; the man who
classifies facts of any kind whatever, who sees their mutual relation and describes their sequences, is
applying the Scientific Method and is a man of science. 8 Scientific method is the pursuit of truth as
determined by logical considerations. The ideal of science is to achieve a systematic interrelation of facts.
Scientific method attempts to achieve this ideal by experimentation, observation, logical arguments from
accepted postulates and a combination of these three in varying proportions. 9 In scientific method, logic
aids in formulating propositions explicitly and accurately so that their possible alternatives become clear.
Further, logic develops the consequences of such alternatives, and when these are compared with observable
phenomena, it becomes possible for the researcher or the scientist to state which alternative is most in
harmony with the observed facts. All this is done through experimentation and survey investigations which
constitute the integral parts of scientific method.
Experimentation is done to test hypotheses and to discover new relationships. If any, among variables. But
the conclusions drawn on the basis of experimental data are generally criticized for either faulty
assumptions, poorly designed experiments, badly executed experiments or faulty interpretations. As such the
researcher must pay all possible attention while developing the experimental design and must state only
probable inferences. The purpose of survey investigations may also be to provide scientifically gathered
information to work as a basis for the researchers for their conclusions.
The scientific method is, thus, based on certain basic postulates which can be stated as under:
1.

It relies on empirical evidence;

2.

It utilizes relevant concepts;

3.

It is committed to only objective considerations;

4.

It presupposes ethical neutrality, i.e., it aims at nothing but making only adequate and correct

statements about population objects;

5.

It results into probabilistic predictions;

23

6.

Its methodology is made known to all concerned for critical scrutiny are for use in testing the

conclusions through replication;

7.

It aims at formulating most general axioms or what can be termed as scientific theories.

Bernard Ostle and Richard W. Mensing, Statistics in Research, p. 2

Karl Pearson, the Grammar of Science, Part I, pp. 1012.

Ostle and Mensing: op. cit., p. 2.

Thus, the scientific method encourages a rigorous, impersonal mode of procedure dictated by the demands
of logic and objective procedure. 10 Accordingly, scientific method implies an objective, logical and
systematic method, i.e., a method free from personal bias or prejudice, a method to ascertain demonstrable
qualities of a phenomenon capable of being verified, a method wherein the researcher is guided by the rules
of logical reasoning, a method wherein the investigation proceeds in an orderly manner and a method that
implies internal consistency.

2.9 IMPORTANCE OF KNOWING HOW RESEARCH IS DONE

The study of research methodology gives the student the necessary training in gathering material and
arranging or card-indexing them, participation in the field work when required, and also training in
techniques for the collection of data appropriate to particular problems, in the use of statistics, questionnaires
and controlled experimentation and in recording evidence, sorting it out and interpreting it. In fact,
importance of knowing the methodology of research or how research is done stems from the following
considerations:
(I)

For one who is preparing himself for a career of carrying out research, the importance of
knowing research methodology and research techniques is obvious since the same constitute
the tools of his trade. The knowledge of methodology provides good training especially to the
new research worker and enables him to do better research. It helps him to develop
disciplined thinking or a bent of mind to observe the field objectively. Hence, those aspiring
for careerism in research must develop the skill of using research techniques and must
thoroughly understand the logic behind them.
24

(ii)

Knowledge of how to do research will inculcate the ability to evaluate and use research

results with reasonable confidence. In other words, we can state that the knowledge of research
methodology is helpful in various fields such as government or business administration, community
development and social work where persons are increasingly called upon to evaluate and use
research results for action.
(iii)

When one knows how research is done, then one may have the satisfaction of acquiring a new

intellectual tool which can become a way of looking at the world and of judging every day
experience. Accordingly, it enables use to make intelligent decisions concerning problems facing us
in practical life at different points of time. Thus, the knowledge of research methodology provides
tools to take at things in life objectively.
(iv)

In this scientific age, all of us are in many ways consumers of research results and we can use

them intelligently provided we are able to judge the adequacy of the methods by which they have
been obtained. The knowledge of methodology helps the consumer of research results to evaluate
them and enables him to take rational decisions.

2.10 RESEARCH PROCESS

Before embarking on the details of research methodology and techniques, it seems appropriate to present a
brief overview of the research process. Research process consists of series of actions or steps necessary to
effectively carry out research and the desired sequencing of these steps. The chart shown in Figure 1.1 well
illustrates a research process.
10 Carlos L. Lastrucci, the Scientific Approach: Basic Principles of the Scientific Method, p. 7.

2.11 CRIATERIA OF GOOD RESEARCH

Whatever may be the types of research works and studies, one thing that is important is that they all meet on
the common ground of scientific method employed by them. One expects scientific research to satisfy the
following criteria:
1.

The purpose of the research should be clearly defined and common concepts be used.

25

2.

The research procedure used should be described in sufficient detail to permit another

researcher to repeat the research for further advancement, keeping the continuity of what has already
been attained.
3.

The procedural design of the research should be carefully planned to yield results that are as

objective as possible.
4.

The researcher should report with complete frankness, flaws in procedural design and

estimate their effects upon the findings.

5.

The analysis of data should be sufficiently adequate to reveal its significance and the methods

of analysis used should be appropriate. The validity and reliability of the data should be checked
carefully.
6.

Conclusions should be confined to those justified by the data of the research and limited to

those for which the data provide an adequate basis.

7.

Greater confidence in research is warranted if the researcher is experienced, has a good

reputation in research and is a person of integrity.

In other words, we can state the qualities of a good research12 as under:
1.

Good research is systematic: It means that research is structured with specified steps to be

taken in a specified sequence in accordance with the well defined set of rules. Systematic
characteristic of the research does not rule out creative thinking but it certainly does reject the use of
guessing and intuition in arriving at conclusions.
2.

Good research is logical: This implies that research is guided by the rules of logical reasoning

and the logical process of induction and deduction are of great value in carrying out research.
Induction is the process of reasoning from a part to the whole whereas deduction is the process of
reasoning from some premise to a conclusion which follows from that very premise. In fact, logical
reasoning makes research more meaningful in the context of decision making.
11

James Harold Fox, Criteria of Good Research, Phi Delta Kappan, Vol. 39 (March,

1958), pp. 28586.

26

12

See, Danny N. Bellenger and Barnett, A. Greenberg, Marketing ResearchA

Management Information Approach , p. 107108.

3.

Good research is empirical: It implies that research is related basically to one or more aspects

of a real situation and deals with concrete data that provides a basis for external validity to research
results.
4.

Good research is replicable: This characteristic allows research results to be verified by

replicating the study and thereby building a sound basis for decisions.

2.12 Problems Encountered by Researchers in India

Researchers in India, particularly those engaged in empirical research, are facing several problems. Some of
the important problems are as follows:
1.

The lack of a scientific training in the methodology of research is a great impediment for

researchers in our country. There is paucity of competent researchers. Many researchers take a leap in the
dark without knowing research methods. Most of the work, which goes in the name of research is not
methodologically sound. Research to many researchers and even to their guides, is mostly a scissor and paste
job without any insight shed on the collated materials. The consequence is obvious, viz., the research results,
quite often, do not reflect the reality or realities. Thus, a systematic study of research methodology is an
urgent necessity. Before undertaking research projects, researchers should be well equipped with all the
methodological aspects. As such, efforts should be made to provide short-duration intensive courses for
meeting this requirement.
2.

There is insufficient interaction between the university research departments on one side and

business establishments, government departments and research institutions on the other side. A great deal of
primary data of non-confidential nature remain untouched/untreated by the researchers for want of proper
contacts. Efforts should be made to develop satisfactory liaison among all concerned for better and realistic
researches. There is need for developing some mechanisms of a universityindustry interaction programme
so that academics can get ideas from practitioners on what needs to be researched and practitioners can apply
the research done by the academics.
3.

Most of the business units in our country do not have the confidence that the material

supplied by them to researchers will not be misused and as such they are often reluctant in supplying the
needed information to researchers. The concept of secrecy seems to be sacrosanct to business organisations
27

in the country so much so that it proves an impermeable barrier to researchers. Thus, there is the need for
generating the confidence that the information/data obtained from a business unit will not be misused.
4.

Research studies overlapping one another are undertaken quite often for want of adequate

information. This results in duplication and fritters away resources. This problem can be solved by proper
compilation and revision, at regular intervals, of a list of subjects on which and the places where the research
is going on. Due attention should be given toward identification of research problems in various disciplines
of applied science which are of immediate concern to the industries.
5.

There does not exist a code of conduct for researchers and inter-university and inter-

departmental rivalries are also quite common. Hence, there is need for developing a code of conduct for
researchers which, if adhered sincerely, can win over this problem
Many researchers in our country also face the difficulty of adequate and timely secretarial assistance,
including computerial assistance. This causes unnecessary delays in the completion of research studies. All
possible efforts be made in this direction so that efficient secretarial assistance is made available to
researchers and that too well in time. University Grants Commission must play a dynamic role in solving
this difficulty.
6.

Library management and functioning is not satisfactory at many places and much of the time

and energy of researchers are spent in tracing out the books, journals, reports, etc., rather than in tracing out
relevant material from them.
7.

There is also the problem that many of our libraries are not able to get copies of old and new

Acts/Rules, reports and other government publications in time. This problem is felt more in libraries which
are away in places from Delhi and/or the state capitals. Thus, efforts should be made for the regular and
speedy supply of all governmental publications to reach our libraries.
8.

There is also the difficulty of timely availability of published data from various government

and other agencies doing this job in our country. Researcher also faces the problem on account of the fact
that the published data vary quite significantly because of differences in coverage by the concerning
agencies.
9.

There may, at times, take place the problem of conceptualization and also problems relating to

the process of data collection and related things.

28

CHAPTER NO. 3
3.

LITERATURE REVIEW

3.1

FUNDAMENTALS

It is particularly critical to the analysis conducted in this document to appreciate that privacy is not a simple
concept, but rather a compound of several interests. Of especial relevance to this discussion are the privacy
of personal be haviour, and the privacy of personal data.
The following materials are relevant:

an introduction and definition of terms;

the mainstream principles that underlie privacy protections, the OECD Guidelines; and

an outline of a recent survey of public attitudes to privacy.

29

A separate paper examines privacy as a strategic consideration for corporations ( Clarke 1996d). This
includes the following segments:

an examination of public opinion;

a summary of existing laws;

harbingers of change;

alternative approaches to corporate strategy; and

the elements of a privacy strategy.

A minimalist regulatory environment has applied to the Australian private sector until now, but is rapidly
coming to an end.

3.2 ISSUES
(a) Privacy of Personal Behaviour
People's interest in enjoying 'private space' is abused by the intrusions that are inherent in most direct
marketing techniques. A further problem is the manipulation of personal behaviour that is the primary
purpose of marketing databases and consumer profiles. A related matter that disturbs some consumers is the
presumption by marketers that computer-generated communications based on database content represents a
relationship with a person.
(b) Privacy of Personal Data
People have a strong interest in controlling the use of data that relates to themselves. Conventional direct
marketing practice abuses many aspects of privacy protection principles. On the list of most serious public
concerns, financial data appears very high (e.g. PC 1995, Clarke 1997a).
The abuse of personal data is being extended by the endeavour on the part of marketers to convert hitherto
anonymous transactions into identified ones, through such means as so-called 'loyalty' schemes. This matter
is addressed in Clarke ( 1995d, 1996e, and 1996i).
Public concern is evidenced through the periodic media coverage of such matters as abuse of data collections
such as the telephone white pages, council records of dog registrations and building approvals, and State
government land titles and marriage registration data. The question of so-called 'public registers' is examined
in Clarke ( 1997g).
(c) Consumer Profiling
30

Consumer profiling involves the accumulation, acquisition and cross-referencing of data about individuals,
possibly combined with geo-demographic data; followed by its use for various micro-marketing purposes.
Its privacy-invasiveness is examined in Clarke ( 1993e and 1997f).
(d) Consumer Interests More Generally
Privacy is one of a number of contentious issues that arise in the relationship between marketers and
consumers, in such areas as conditions of contract, and the recourse and sanctions available in the event of
malperformance by the marketer.
Although considerable progress has been made in relation to consumer rights, the regulatory arrangements
are not technology-neutral, and much of it evaporates in the electronic context. For an examination of
consumer issues in marketing through electronic channels, see Clarke ( 1996h, 1997h and 1997i).
3.2.1 OVERVIEW
This chapter will review the existing and published literature on direct marketing. It begins with the
description of the origin of direct marketing. Then the definitions of direct marketing provided by various
authors will be reviewed. Further, the factors contributing to the growth of direct marketing will be
appreciated. Furthermore, the various forms of direct marketing and its cornerstones will be described. The
benefits and limitations of direct marketing will also be analysed. The chapter will then discuss the
implications of information in direct marketing. Finally, the chapter will report on the ethical considerations
and social responsibility in direct marketing and the legislations and regulations that regulate the direct
marketing activities.
3.2.2 ORIGIN
The term direct marketing was first used in the year 1960 by Lester Wunderman (OMalley et al., 1999;
p4). However, the origin of direct marketing dates back to the year 1498 when a book catalogue was
published by Aldus Manutius in Venice. In England, the direct marketing began in the year 1667, when
William Lucas published a gardening catalogue. (Evans et al., 2004; p1) Direct marketing has evolved in the
UK from mail order. In the beginning of 20th century, the UK mail order began to develop. One of the mail
order catalogues of that period is the Freemans catalogue which was launched in 1905 (McCorkell, 1997).
After the war, the mail order grew at a fast and steady pace. The share of direct channels in the retail sales
grew steadily between 1950 and 1970 (McGoldrick, 1990; p 60). In the mid 1980s, mail order lost some of
its share because of the competition from the larger high street stores who also started providing credit
facilities (Stewart, 1992). In the late 1980s, the mail order again gained popularity. This was fuelled by
31

retailers such as Marks & Spencer and Next, who helped the direct marketing sector grow by improving the
convenience of catalogue shopping by improving the product range and credit terms. (OMalley et al., 1999;
pp 5-6) Since then, direct marketing has grown tremendously such that it has been regarded as the fastest
growing sector of marketing communication.
3.2.3 DEFINITIONS
Defining direct marketing is a difficult task as it is very much under debate that what exactly constitutes
direct marketing. The reason for such definitional difficulties is direct marketing is neither a medium nor a
channel of distribution (Evans et al., 1995; p16). The UK Direct Marketing Association has defined direct
marketing as communications where direct contact is made, or invited, between a company and its existing
and perspective customers, and results are measured to assess return on investment (Ng, 2005; p628)
According to the American Direct Marketing Association (ADMA), Direct marketing is an interactive
system of marketing which uses one or more advertising media to effect a measurable response and/or
transaction at any location. This is the most comprehend definition that is offered by ADMA (Cited in
Lindgren and Shrimp, 1996; p 520). Although this is the most accepted definition it has attracted criticism
because it focuses attention primarily on using a particular type of advertising to effect a measurable
response (Bauer and Miglautsch 1992). As a result a different definition has been offer by Bauer and
Miglautsch (1992), Direct Marketing is a cybernetic marketing process which uses direct response
advertising in prospecting, conversion and maintenance. This definition has been accepted by the UK
Direct Marketing Association. (OMalley et al., 1999; p7)

3.2.4 FACTORS CONTRIBUTING TO THE GROWTH OF DIRECT MARKETING

There has been tremendous growth in the expenditure on direct marketing. In the UK, the total estimated
expenditure for the year 2003 on direct marketing was 13.7 billion. This was 15 % more than the previous
year (Ng, 2005; p629). There are a number of reasons for the growth of direct marketing in usage. Following
are the major factors that have contributed to the growth of direct marketing:
i.

Market Fragmentation

According to Smith (1993), the fragmentation of consumer markets is an important factor that has led to
growth of direct marketing. Market fragmentation has decreased the application of traditional mass
marketing channels. Whereas direct marketing channels offer better capacity to target distinct consumer
groups in market segments, and therefore more organisations are now using direct marketing techniques.
(Cited in Jobber and Lancaster, 2006; p328)
32

ii.

Changing demographics and lifestyles

There have been significant changes in the demographics and lifestyles of people. As a result, the
compositions of the households have also changed. Now-a-days, more women are working; there are more
single parent families, etc. All these changes have left less time with the consumers, and therefore they are
more attracted towards the convenience of shopping online, by phone, or by mail. This has led to growth of
direct marketing. (Brassington, and Pettitt, 2000; p732)
iii.

Declining effectiveness of traditional media

Nowadays, there is more intense competition between organisations for consumers time and attention. The
amount of advertising on T.V, radio, press and other forms of media has increased tremendously. This has led
to a problem of clutter where advertising is highly unfocused and untargeted. Also the costs of these
traditional marketing channels have increased considerably. All these factors have reduced the effectiveness
of traditional media. (Evans et al., 1995; p17)
iv.

Rise of the database

There have been significant decreases in the cost of manipulating and storing information in the recent years.
Today, more firms can develop and manage marketing database. The costs of the hardware have also
decreased and the data processing capabilities have improved. Therefore it is now easier to hold vast amount
of customer information and update it on time (Roberts and Berger, 1989). This has contributed to the
growth of direct marketing.
v.

Sophisticated analytical techniques

The developments in the sophisticated analytical techniques have further boosted the growth of direct
marketing. This is because these analytical techniques enhance the targeting of consumers as it helps to
analyse the information about the consumers. These analytical techniques along with the database
technology have contributed to the growth of direct marketing. (OMalley et al., 1999; p18)
vi.

Impact of new communications technology

The new communications technology has paved the way for the growth of direct marketing. It is now
possible to handle hundreds of customers at a time, thus reducing the chances of losing of customers. For
instance, by using automated systems, it is possible to handle hundreds of calls of the potential customers
simultaneously. Also the costs of communication technology have decreased considerable, making it a cost
effective option for firms (Brassington, and Pettitt, 2000; pp.733-4).
vii.

Increased customer confidence

Direct marketing helps the businesses to build trust and confidence within an ongoing relationship with an
individual customer. This makes the customers more receptive and loyal to the company. Such benefits have
33

led more and more companies use direct marketing strategies and thus the growth of direct marketing
(Brassington, and Pettitt, 2000; pp.733-4).
3.2.5 FOUR COMERSTONES OF DIRECT MARKETING
According to Holder (1998), (cited in Sargeant and West, 2001) there are four cornerstones of direct
marketing. They are,
a.

Continuity

b.

Interaction

c.

Targeting

d.

Control.

Continuity: Continuity is an important feature of direct marketing. In direct marketing, the aim is to utilise
the customer information to establish a continuous relationship with the customers. That is, the direct
marketing aims at the lifetime value that can be achieved from the relationship with the customers.
Interaction: Another important feature of direct marketing is the concept of interaction. Direct marketing
offers opportunities to firms to engage with the customers and interact with them.
Targeting: Direct marketing also has a better ability to target customers. The availability of customer
information databases such as modern geodemographic and lifestyle lists improves the ability of direct
marketing to target customers with relevant messages and relevant marketing offers.
Control: Lastly, direct marketing is characterized by control. It means that direct marketing campaigns can
be pre-tested in order to measure the effectiveness of the campaigns on the target group. For instance, three
or four types of mailings may be developed and pre-tested on a sample of target audience. The response can
be assessed and the most effective mailing can then be selected and used on the rest of the target audience.
3.2.6 FORMS OF DIRECT MARKETING
Direct marketing consists of all those methods that facilitate distribution of products, information and
promotional benefits to target consumers through interactive communication in a way which allows response
to be measured (Jobber and Lancaster, 2000; p168). It should be noted that these direct marketing
techniques are often integrated with other marketing techniques such as sales promotion and public relations
(Groucutt et al., 2004; p356).
The major forms of direct marketing are the following:
i.
ii.

Direct mail marketing

Catalogue marketing
34

iii.
iv.
v.
vi.
vii.
viii.

Telemarketing
Direct response television marketing
Kiosk marketing
New digital technologies
Online marketing
Face-to-face selling

i.

Direct mail marketing: Direct mail is the material distributed to the home or business address to

promote a product or service or to maintain an ongoing relationship through the postal service. It may be a
simple letter, a comprehensive catalogue or a sample product. Direct mail is the one of most widely used
direct marketing technique in the consumer and organisational markets (Brassington and Pettitt, 2000; p734).
ii.

Catalogue marketing: Catalogue marketing is the direct marketing through print, video or electronic

catalogues that are made available to customers through postal service, through stores or through internet.
Catalogue is an effective sales and relationship builder. A recent study conducted by Frank About Women, a
marketing-to-women communication company found that a majority of women who receive catalogue are
actively engaged with them. (Kotler et al., 2008; p486)
iii.

Telemarketing: Telemarketing is the use of telephone to create and exploit a direct relationship

between the customer and the seller. The main benefits of telemarketing are that it provides for interaction,
allows for an instant feedback, is flexible and offers an opportunity to over come objection. Other qualities
include development of customer goodwill, is highly measurable and accountable i.e. the effectiveness can
be easily analysed. The growth of telemarketing in the UK has been phenomenal over the past decade. This
is because it is comparatively cheaper than personal selling but offers almost same benefits (Fill, 2002; p
675).
iv.

Direct response television marketing: Direct response television marketing consists of two forms.

The first is Direct Response Television Advertising (DRTV) and the other is Home shopping channels.
DRTV consists of those advertisements that are on air for 60 or 120 seconds which persuasively describes a
product and gives customers a toll-free number or a website for ordering. The other form of Direct response
television marketing is Home Shopping Channels. Home Shopping Channels are television programs or
entire channels fully dedicated to selling goods and services. The most popular examples of Home Shopping
Channels are Quality Value Channel (QVC), Home Shopping Network (HSN), and ShopNBC (Kotler et al.,
2008; p488).
v.

Kiosk marketing: A kiosk is a smalldvert stand alone unit that without management involvement

performs a function, generally to provide information to its user. Kiosks have become an important tool of
direct marketing. Kiosks are now used by businesses for displaying information about their products and

35

along with ordering mechanism. Business marketers also use kiosks to collect sales leads and to provide
information at the trade shows. (Anderson, 2006; p12)
vi.

New digital technologies: The rapid advances in the technology have enabled direct marketers to

reach and interact with consumers almost everywhere and at anytime. Some of the new direct marketing
technologies are mobile phone marketing, podcasts and vodcasts, and interactive TV. Mobile phone
marketing includes things such as ring-tone giveaways, mobile games, and ad-supported content. Podcasts
and vodcasts are audio and video files respectively that can be downloaded by internet to a mp3 player or
any other handheld device. Interactive TV allows viewers to interact with programming and advertising
using their remote controls (Kotler et al., 2008; p492).
vii.

Online marketing: Online marketing is the use of internet to market goods and services and to build

customer relationship over the internet. The technological advances have given birth to a digital age and
increasing use of internet has made online marketing the fastest growing sector of direct marketing. Direct
marketers have used internet for the following marketing purposes: i. Research and planning tool ii.
Distribution and customer service iii. Communication and promotion (Brassington and Pettitt, 2000; p761).
viii.

Door-to-door selling (personal selling): Personal selling is the personal presentation by the firms

sales force for the purpose of making sales and building relationship. Although personal selling has been
argued by several authors as being a part of direct marketing, Kotler et al. (2008) argues that personal selling
is a important part of direct marketing as its facilitates distribution of products, information and promotional
benefits to the target consumers through interactive communication. Also the door-to-door selling allows
response to be measured, which restates that personal selling is an important form of direct marketing.

3.2.7 BENEFITS OF DIRECT MARKETING

Direct marketing approaches by organisations offers a number of benefits to both organisations and
consumers. Following are the benefits that both buyers and sellers can accrue from direct marketing:
a.

Benefits to sellers

i. Accountable returns:
36

Direct marketing provides direct marketers with opportunities to link cause with effect. That is, the sellers
can easily calculate the ROI (Return On Investment) of the campaigns. Moreover, the results from marketing
activities carried out in various media can be accounted and compared so as to come up with an optimal
communication strategy (Sargeant and West, 2001; p9).
ii. Builds customer relationship:
Direct marketing is considered a powerful tool for building customer relationship. Direct marketers can use
database marketing to target small groups and individual customers with relevant promotional offers and
products. Direct marketing also offers opportunities to interact with customers about their needs, tastes and
alter their product and services accordingly (Kotler et al., 2008; p482)
iii. Suitable for niche marketing:
The diversity of consumer demand has been increasing and this has led to more emphasis on micro or niche
marketing strategy by marketers. Direct marketing enables one-to-one approach of interacting with
customers and this positions direct marketing to take advantage of these trends. Direct marketing helps
marketers in targeting precise market segments and therefore more easily follow micro marketing strategies
(Rosenbloom, 2003; p478)
iv. Cost-efficient:
Direct marketing offers the benefit of being cost efficient. Direct marketers have low-cost, speedy, efficient
alternatives to reach their target customers. Cheaper media such as telemarketing, direct mail and company
websites have proven to be more cost effective (Kotler et al., 2008; p482).
v. Greater control and flexibility:
Sargeant and West (2001) argues that direct marketing gives greater control to the marketers as they can
control the timing of the campaigns as well as the timing of the response, unlike mass marketing where there
is little or no control on the response of the consumers. This helps the seller in managing the consumer
response and ensuring that a particular day or period may not by swamped by requests for products or
services. Direct marketers also become more flexible to make adjustments to prices programs and offers
when using a direct marketing approach (Kotler et al., 2008; p482-3).
vi. Wide coverage:
Although, direct marketing enables a high degree of selectivity, it has the ability to offer enormous
geographical range. Techniques such as direct mail, telephone, internet, TV, radio stations can help sellers to
reach customers anywhere (Rosenbloom, 2003; p478).
vii. Wide range of media:
37

According to Sargeant and West (2001), direct marketing offers marketers an access to wider range of media
than those available in mass marketing. Direct marketers can use mediums such as direct mail, telephone,
internet, inserts, radio, TV, print adverts, etc. Such wider range of media opens up additional creative
opportunities.
b.

Benefits to buyers:

According to Kotler et al. (2008), the consumers can get the following benefits from direct marketing.
i. Convenience and comfort:
Direct marketing make the shopping for consumers convenient and comfortable. Consumers do not have to
face the crowded stores and malls, and traffic congestion. Also since larger proportion of women are now
working and the fast-paced lifestyle leaves less time with consumers, direct marketing can make shopping
quicker and easier (Rosenbloom, 2003; p480).
ii. Availability of wider range of products:
Direct marketing can offer wider range of products to consumers almost anywhere in the world. This is
because direct marketing is unrestrained by physical boundaries. Therefore consumers have the option of
choosing from a large selection of products.
iii. Access to comparative information:
Direct marketing channels offer consumers a better access of comparative information about products,
companies and competitors. Websites and good catalogues provide information in more useful forms than
any other mass marketing channel.
iv. Personalised approach:
Direct marketing enables the sellers to interact with buyers and thus the approach is more personalised.
Sellers can also tailor the products and services according to the needs of the consumer. Thus direct
marketing gives the consumers greater control and satisfaction.
3.2.8 LIMITATIONS OF DIRECT MARKETING
According to Rosenbloom (2004), direct marketing has the following limitations:
i. Low response rates:
The response rates in direct marketing are very low. According to the Direct Marketing Associations
Statistical Fact Book (2002), the average response rate is between 1 to 2 percent when direct mail is used.
The industry estimates that the response rates are even lower in other forms of direct marketing.
ii. Intense competition:
There is intense competition in direct marketing. There are thousands of firms who use direct marketing and
this has resulted in cluttered and saturated markets. This intense competition has also contributed to low
response rates.
38

iii. Bad reputation:

Although there have been huge growth in direct marketing, the direct marketing industry suffers through an
image problem. The unethical and dishonest practices of some direct marketing firms have earned negative
publicity about the industry. This has been one of the big limitations of direct marketing.
iv. Limited exposure of products:
Direct marketing provide limited exposure of products to the consumer. Even the best catalogues, television
adverts and websites cannot exhibit the product equivalently to the conventional marketing channels.
However, such limitations can be reduced in some case by using samples as a supplement to direct
marketing channels.
v. High operating costs:
Although the cost of setting direct marketing systems is low initially, the operating costs are high. For
instance, direct mail, one of the major medium of direct marketing, involves high printing, paper and mailing
costs. Moreover, the costs of order processing and shipping can also be high compared to the sales volume
produced.
3.2.9 IMPLICATIONS OF INFORMATION IN DIRECT MARKETING
a. Significance of information to direct marketers:
According to Dolnicar and Jordaan (2007), the exchange of information between marketers and consumers is
one of the fundamental aspects of successful relationships. In todays business environment, the value of
information about consumers cannot be denied. The information about customers is very significant for the
direct marketing campaigns. Direct marketing focuses on the collection, storage and use of customer
information so as to target customers with relevant products, services and promotional benefits. Direct
marketers use information about consumer preferences to form group of consumers with similar
characteristics i.e. similar tastes, preferences, interests etc. Such information helps direct marketers to
personalise communication and target customers with relevant information. Thus, direct marketing
programmes are critically dependent on the availability of detailed, individual-level consumer information
(Robertshaw and Marr, 2005; p187).
Such information usage by direct marketers is not only beneficial for marketers but also for customers, as
relevant communication can be delivered to the consumers based on their interests and preferences.
b. Sources of information:
Direct marketers obtain information from a variety of sources. Most individual- level transactional data is
obtained from customer records, whereas the insightful and non-transactional information related to the
interests, beliefs, preferences values, opinions, spending habits, future purchase intentions, religion, political
views, television viewing habits and other lifestyle characteristics is generally obtained by the voluntary
disclosure of the consumers. Direct marketers generally employ some type of marketing process such as
loyalty cards, warranty cards, response to direct response ads, sweepstake promotions, discount and
39

cashback offers to collect these non-transactional information about consumers (Robertshaw and Marr, 2005;
p187).
3.2.10 ETHICAL CONSIDERATIONS AND SOCIAL RESPONSIBILITY IN DIRECT
MARKETING
The field of direct marketing ethics is considered of immense importance. However, this field has been
traditionally been proven as a difficult area of study. The discussion related to ethics requires an
understanding of social responsibility. But very often it becomes difficult to distinguish between the two
(OMalley et al., 1999; p419). According to De George (1999), ethics is the study of morality, those
practices, and activities that are importantly right and wrong, whereas social responsibility refers to the
effects of those practices and activities on the society.
1.

Ethical considerations

Despite the growth of direct marketing, direct marketing has been criticised by several authors on ethical
grounds. According to Sargeant and West (2001), following are the ethical grounds on which direct
marketing has been criticised.
a.

Promoting Materialism: The main criticism of direct marketing as an activity is that direct marketing
advertisements along with the general advertisements promotes materialism. The authors argue that
direct marketing make people buy products that they would not buy otherwise.

b.

Exploitation: Direct marketing is accused of exploitation of emotions such as love, affections,

friendship and maternal feelings. For example, use of taglines such as Happy families buy, good
mothers buy etc often try to exploit human emotions. Moreover, the children and direct marketing
is often looked as a more serious topic. Direct marketing often persuades children to demand
products that the parents cannot afford or wish not to give to their children.

c.

Dishonesty: Although the dishonest direct marketing advertisements are rare because of the UK and
EU legislations and the presence of various professional agencies, the half truth remains. The
advertisements often make comparisons based on one criterion, or with some brands and make
claims that are not fully true and subject to certain conditions.

2. Social Responsibility:

40

The subject of social responsibility has become more important in direct marketing recently. Direct
marketers are being pressed to be more accountable in their campaigns and to become more socially
responsible. Following are the headings under which the societal impact of direct marketing will be
discussed.
a. Privacy issues:
The explosion in direct marketing practices has raised consumer concerns over threats to privacy.
According to Evans et al (2004), the specific privacy issues relating to direct and database marketing
are a. information privacy, b. physical /interaction privacy, c. accuracy. Information privacy means
the extent to which individuals can control who holder and uses of their data. Physical or interaction
privacy refers to the physical disturbance of direct marketing activities such as direct mails, telesales,
emails, etc. into the daily lives of consumers. Accuracy refers to the extent to which the consumers
can the accuracy of their data.
b. Environmentalism:
Another issue of social responsibility associated with direct marketing is environmentalism. Many
consumers in UK have real concerns about the environmental impacts of direct marketing
communications such as direct mail, leaflets etc. Since the response rates are low, organisations use
vast quantities of direct communications to get more sales. The problem is further increased by the
usage of glossy paper by many companies to attract customers, as these cannot be recycled.
Therefore organizations must become socially responsible towards the environment. This can be
done by utilizing information in such a way as to generate smaller and more tightly defined and
relevant direct marketing communications. This would also help in reducing the wastefulness of their
operations (OMalley et al., 1999; p436-7).
c. Exclusion:
Direct marketing activities tries to target some sectors of the society. This means that some members
of the society will be excluded. According to Cespedes and Smith (1993) (cit. in OMalley, 1999;
p437), people from different races, religions, and ethnic groups tend to live in different areas and
since geography is one of the major criterion of used in direct marketing to target people, there will
be some sectors that will be discriminated. For instance, organizations may target localities with high
spending power. This would limit the choices of the lower income group.
3.2.11 LEGISLATIONS AND REGULATIONS IN DIRECT MARKETING
Organisations that adopt direct marketing as a part of their marketing strategy or as a strategy as a whole,
have to abide by the laws that regulate direct marketing. Although, there is no particular Direct Marketing
Act where all the direct marketing laws can be found, there is a proliferation of statutes, regulations,
41

directives and precedents that organisations have to follow. Some of the major laws and regulations affecting
direct marketing are discussed below:
i. Data Protection Act, 1998: All the companies that use personal information are abided by the Principles
outlined in the Data Protection Act. The Data Protection Act is concerned with the personal information of
consumers which is automatically processed. The Data Protection Act gives protects the consumers by
giving them certain individual rights. It also requires the organisations gathering, storing and using personal
information to be open about their activities and follow sound and proper activities .(Source:
http://www.dma.org.uk/content/Pro-Code.asp)
ii. Direct Marketing (DM) code of practice: The DM Code of Practice sets the standards of ethical conduct
and best practice that organizations must follow. The code is administered and monitored by the independent
Direct Marketing Authority. The Code covers all forms of direct marketing. The Code reflects the
requirements of new legislations related to direct marketing, such as the Data Protection Act 1998 and
Distance Selling Regulations 2000 (Source: http://www.dma.org.uk/content/Pro-Code.asp).
iii. ASA/CAP code: The Advertising Standards Authority is an independent body set up by the advertising
industry. This independent authority monitors that the rules laid down in the CAP Code which has to be
followed for non-broadcast advertisements, sales promotions and direct marketing that are laid down in the
CAP Code. This eleventh edition of the British Code of Advertising, Sales Promotion and Direct Marketing
came into force in March 2003. (Source:http://www.dma.org.uk/content/Pro-Code.asp)
iv. Preference services: The preference services run by Direct Marketing Association (UK), enables
businesses and consumers to register their wish of opting out of receiving unsolicited direct marketing
communications such as leaflets, telesales calls, emails etc. Organisations are required either by law or by
the codes of practice to follow these wishes of businesses and consumers. The various preference services
run by DMA are Mailing Preference Service (MPS), Telephone Preference Service (TPS), Email Preference
Service (E-MPS), Fax Preference Service (FPS) and Baby Mailing Preference Service (Baby MPS).

42

CHAPTER NO. 4
4 DATA PRESENTATION AND DATA ANALYSIS
The marketing mix in direct marketing mode, by and large, remains the same except for the communication
programme and customer service, which have acquired new meaning. For example, if the marketer
guarantees delivery of the product within a defined time frame, also promises to take it back in case it fails to
live upto customer expectations and return his/her money, then the customer service executive cannot refuse
a claim. This is opposed to general marketing where the marketing can put several disclaimers and may
refuse the customer. In direct marketing, refusal to accept customer claim without any question may cost the
marketer significant losses as he not only loses that customer but subsequent prospects as well. In general
marketing, the loss can be contained through other elements of the marketing mix. In addition to marketing
mix decisions, the direct marketer has to pay special attention to the following factors in decision making:
1) Communication Programme:
This involves both creative and media decisions. The creative decisions center around the copy platform,
graphic design elements, mailers, stickers and so forth.
The media used by direct marketers are mailers, telephone, television and the internet. Direct response print
and television advertising are particularly effective in generating response to the offer, especially if it is
complex to understand. Also, the direct marketer today uses various outdoor, retail panels( Just Talk and BPL
MOTS brands of prepaid Sim cards in Mumbai) and even stickers to retain the brand at the top of customers
mind. These also serve the purpose of a reminder.
2) Customer Service:
Customer service is a key input in direct marketing. In a direct marketing, physical contact with the
customer is low, and it is the quality of service that facilitates customer decision making. Service, therefore,
is an investment and cannot be ignored. The customer service mix today involves speed and accuracy of
order fulfillment, immediate customer complaint resolution, etc.
3) Timing and Sequencing:
This factor involves determination of whether the product or service is offered once, as a part of the
campaign or continuously. This will obviously involve campaign decisions like whether to have bursts,
pulsing or a continuous campaign.

43

4.1 CHARACTERISTICS OF DIRECT MARKETING

Each of the tools of the marketing communications mix can be considered in terms of their core
characteristics. The Mix Selection Framework enables insight into these characteristics. The characteristics
are; communications, credibility, cost, control and tasks.
Communications concerns the size of audience a direct marketing campaign can reach and whether
messages can be personalised and be capable of interaction. On the first element the answer is that the size
of audience is dependent on the financial resources available. In reality direct marketing is expensive so the
audience is restricted. However, direct marketing incurs low levels of wastage so the size of audience is not
particularly significant. Direct marketing excels at the use of personalised messages as it is a highly targeted
activity. Indeed, the level of interaction within direct marketing can also be high as this tool is used to
engage people on a behavioural dimension.
Credibility is concerned with the perception receivers have of the expertise and objectivity of the source of
a message. Using these criteria, direct marketing is perceived to be a relatively low in terms of credibility.
However, some direct marketing campaigns, if developed and researched properly highly regarded. This
depends largely on the perceived value, tone and style of the campaign.
Costs associated with direct marketing are generally high. The absolute costs, the overall costs of funding
the exercise, can be high if there are people involved in the campaign (eg telemarketing) or low if run as a
technology only exercise (eg email programme).

Relative costs, those costs incurred reaching individual

members of the target audience, are also high. The cost of a direct marketing campaign spread across each
member of the target audience reduces the cost per contact. However, unlike the impact of relative cost with
advertising, with direct marketing the relative costs are high.
Control over direct marketing activities is strong. As with advertising, direct marketing events can be
terminated quite quickly.

These campaigns can be created, launched and terminated according to

management preferences. However, it should be remembered that direct marketing activities are rarely used
in isolation, and should be used as part of an integrated campaign. The implication is that the exercise of
control is mediated by the use of other elements of the marketing communications mix.

4.2 DATABASE DEVELOPMENT

44

Database marketing is the most effective way to customize the marketing mix to suit target markets. This
helps not only in customizing the offering but also its delivery. Database marketing is an interactive
approach to marketing that uses all communication tools and media vehicles to reach to the target market. It
is also the basis of all relationship marketing efforts of the company. The information stored in the database
is used to develop customer loyalty and to identify all potential buyers for any new product or service. It also
helps in identifying the most cost effective media and delivery vehicles.

4.3 CHARACTERISTICS OF A GOOD DATABASE:

1)

Each customer or prospect should be treated an individual entity and hence a separate record for

him/her should exist in the marketing database. Market segments are an agglomeration of such individual
customers.
2)

Each such marketing record should contain all the relevant information and access details like name,

address, telephone numbers, frequency of product use, experience with the product, industry and decision
making units for organizational customer.
3)

This information should be available to all departments and employees of the company involved in

the direct marketing programme so as to enable them to be customer friendly.

4)

The aim of the organization should be to replace routine usage surveys with this database.

5)

Information technology tools should be used to strengthen this database and also develop corporate

responses to the customer. These tools can also be used to identify opportunities and threats in the customer
environment and craft appropriate responses which will help the marketer to exploit opportunities and
neutralize threats. The use id these tools should also help in optimum resource utilization.

4.4 THE STRENGTHS OF DATABASE MARKETING ARE:

1) Measurability:
Unlike conventional marketing, direct marketing response can be measured. This helps firms redefine
their marketing programme if required and also to customize it to segment needs.
2) Testable:
Effectiveness of different elements of a marketing programme can be tested.

45

3) Customisation:
The database provides the firm with an opportunity to customize its communication with the target market.

4.5 TYPES OF DIRECT MARKETING

The most common forms of direct marketing are:

Internet marketing

Face-to-face selling or Personal Selling

Direct mail

Catalogs

Telemarketing

Direct-response advertising

Kiosk marketing

Email Direct Marketing

Other types of direct marketing include: distributing flyers; door-to-door solicitations; curbside stands; FAX
broadcasting; television marketing (i.e., infomercials); coupon ads in print media; and voice mail marketing
Lets look at these in more detail.
Internet Marketing
The Internet has revolutionized direct marketing for promoting the sale of products and services to targeted
audiences. Access to the Internet provides users with services in four basic areas:

Information

Entertainment

Shopping

Individual and group communication

Online channels can eliminate geographic considerations. With this capability people around the world have
the same access as the person across the street. Many businesses that can sell their products and services
through downloading, or who can economically ship those products, have discovered an entirely new way to
market.
The Internet makes direct marketing easier, more targeted, more flexible, more responsive, more affordable,
and potentially more profitable than ever. Virtually every business should seriously consider the Internet as a
part of their marketing mix and determine if it is a viable fit for their direct marketing efforts.
Face-to-Face Selling or Personal Selling
The most traditional direct marketing involves the in-house sales force personally contacting potential and
established consumers. Making personal sales calls on prospects is another technique of direct marketing.
You should first conduct research on the companies, or the target prospects that you are trying to sell your
46

product or service too. You can also buy a list from a reputable list company. If you take this route make sure
that you have complete information on your target market. When making a personal sales call you must
write a sales presentation before hand. This presentation should be written to fit the needs and desires of the
prospect that you are presenting your product too. Your presentation should provide clear examples, or even
demonstrations of how your product or service will accomplish this. Your presentation should contain more
that just one way your product can be of service to your prospect. You must also be prepared to handle
objections and questions that the prospects will haveExamples of organizations that use face-to-face selling
include:

Mary Kay

Avon

Amway

Direct Mail
Direct mail is described as sending information about a special offer, product or sale announcement, service
reminder, or some other type of communication to a person at a particular street or electronic address.
Historically direct mail has existed in the form of printed materials, but CDs, audio tapes, video tapes, fax
mail, email, and voice mail are also used in direct mail campaigns. For example, America Online
experienced a highly successful campaign through mailing out CD-ROMs to prospective customers. Direct
mail permits high target-market selectivity; it can be personalized, it is flexible, and it allows early testing
and response measurement to take place. A highly selective and accurate mailing list often determines the
success of direct mail efforts to enhance response rates and control costs. One of the most commonly used
mediums in direct marketing is direct mail. Direct mail allows you to design marketing pieces in many
different formats. Direct mail can include envelope mailers, catalogues, self-mailers, snap mailers,
dimensional mailers, brochures, and postcards. When you write your direct mail piece make sure you know
your target market, and how you are going to appeal to their wants and needs. Write your objective and refer
to it often. Don't lose sight of where you want to go with the piece that you are writing. You can purchase a
mailing list of businesses and services in your target market from a list company, or you can develop your
own list by gathering email addresses on your web site.

Catalogs
Product catalogs are another version of direct mail where the catalogs are the communication tool. The most
common use of this approach involves featuring a variety of products that target the needs of a specific
audience who have shown a propensity to order from catalogs. An increasing number of business-to-business
marketers are sending catalogs on CD-ROM to prospects and customers. The average U.S. household
receives more than 50 catalogs each year, ranging from general merchandise to specialty goods.
Examples of general merchandise catalogs are:
47

Spiegel

J.C. Penny

Examples of specialty goods catalogs are:

Pottery Barn

PC Connection

Telemarketing
Direct marketing that involves calling people at home or work to ask for donations, an opinion, or for sales
purposes
The process of contacting people on a qualified list to sell services over the phone has grown in popularity to
the point that the average household receives 19 telemarketing calls each year. Successful telemarketing
campaigns depend on a good calling list, an effective script and contact structure, and well-trained people
that are compensated and rewarded for making calls that result in sales.
Telemarketing is a direct marketing sales technique that has the advantage of speed in a marketing campaign.
When you are a conducting a telephone solicitation you should first introduce yourself then offer an
incentive in solving a problem that you know exists (to do this would require you to do some research on the
business or what individuals would be looking for in your product). Ask question that you know will lead to
a yes answer (keep prospects on phone answering yes to your questions). Describe your product or service
and how it solves the client's needs. Ask if they have any questions. You now can ask for a face to face
meeting, or to get permission to send information via mail or e-mail, or make another brief follow-up call. If
unavailable, ask what would be a good time to call back.
The telecommunications industry, for example, has used telemarketing extensively to attempt to increase
their market share.
This includes:

AT&T

MCI WorldCom

Sprint

Direct-Response Advertising
Direct-response advertising is communicating with potential buyers through television, radio, magazines,
and newspapers. The prospective consumer watches, hears, or reads about the product or service and initiates
a call to a toll-free number to place their order. Television, for example, offers a wide range of exposure,
from a 30-second commercial to a 60-minute infomercial. In direct response marketing the customer
responds to the marketing message directly. An example, of this would be infomercials, where prospects
view a television presentation of a product offering, and can make a purchase with a credit card over the
telephone or internet. You can use communications in magazines, newspapers, radio, e-mail, and direct mail
to solicit a response. For example, order forms or coupons in magazines and newspapers to purchase
48

products, or receive discounts on products are techniques that have been used very successfully in increasing
sales. These same offers are distributed by e-mail and tell and toll-free numbers, which in today's marketing
world, is more economical and faster
Kiosk Marketing
Customer order machines, versus vending machines that actually provide products, are another form of
direct marketing. Examples are:

Eddie Bauer: Stores place computer terminals to order from the entire line of products not available

in the retail store.

Florsheim Shoe Company

Your banks automatic teller machines (ATMs) placed in convenient and high traffic areas are another
example of kiosk marketing. A combination of these direct marketing techniques may offer the optimal
revenue generating solution.
Email Direct Marketing
This form of direct marketing targets consumers through their Email accounts. Email addresses can be
harvested from websites, forums, or purchased. Some companies require you to receive announcements to
use their websites.The most common medium today for direct marketers is e-mail because of its low cost,
and because customer responses can be generated rapidly. You must understand that the internet is a different
medium. The copy that worked for you in postal mail will not on the internet, not as e-mail. In e-mail
copywriting, the subject is the headline, you must write succinct headline-3 to 5 words. Your subject
determines whether your e-mail gets read or not. Next, make it personal. People on the internet want
personal notes. Next, get to the point keep it short and simple. Next, give them an incentive to act by giving
them a reason to buy now. Next, include a call to action to tell people what you want them to do. Don't leave
them wondering what to do next. Next, drive people to your web site (don't try to close the sale in the email). Next, build relationship with your clients. Listen to their want and needs. Treat your clients like you
would treat yourself. Next, you must follow through on your promises that you made to your client. Do what
you said you were going to do.

4.6 WHAT ARE THE ADVANTAGES OF DIRECT MARKETING?

Direct marketing benefits customers in many ways. Home shopping is fun, convenient, and hassle-free. It
saves time and introduces consumers to a larger selection of merchandise. They can do comparative
shopping by browsing through mail catalogs and on-line shopping services. They can order goods for
themselves or others. Business customer also benefits by learning about available products and services
without trying up time in meeting sales people.

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Sellers also benefit. Direct marketers can buy a mailing list containing the names of almost any group: lefthanded people, overweight people, and millionaires. They can personalize and customize their messages.
According to Pierre Passavant: We will store hundredsof messages in memory. We will select ten
thousand families with twelve or twenty or fifty specific characteristics and send them very individualized
laser-printed letters. Direct marketers can build a continuous relationship with each customer. The parents
of the newborn baby will receive periodic mailings describing new clothes, toys, and other goods as the child
grows. Nestls baby food division continuously builds a database of new mothers and mails six
personalized packages of gifts and advice at key stages in the babys life.
Direct marketing can be timed to reach prospects at the right moment, and direct marketing material receives
higher readership because it is sent to more interested prospects. Direct marketing permits the testing of
alternative media and messages in search of the most cost-effective approach. Direct marketing also makes
the direct marketers offer strategy less visible to competitors, finally, direct marketers can measure responses
to their campaigns to decide which have been the most profitable.
Direct marketing exploits the growth in new technology, and can create a completely new distribution
channel direct to the customer or end user. Discover the advantages of direct marketing for your business.
Direct marketing is a marketing tool which comprises activities such as direct mail, telemarketing, mail
order, direct response advertising and email marketing.
Direct marketing provides a unique range of benefits because it enables you to engage directly with your
audience whether they are prospects, leads, end users or existing customers.
Other advantages of direct marketing include:
Flexible Targeting
Direct marketing enables you to talk directly identify, isolate and communicate with well-defined target
markets. This means you get a higher conversion and success rate than if you tried communicating to
everyone in the mass market. And direct marketing is also far cheaper than mass market communication.
Multiple Uses
Direct marketing doesnt just have to be used to sell it can be used to test new markets and trial new
products or customers, to reward existing customers to build loyalty, collect information for future
campaigns, or segment a customer base.
Cost-Effectiveness
The cost per acquisition of direct mail can be significantly less than other marketing methods. Plus once
youve acquired a customer, you can also benefit from highly profitable repeat sales, gained once again
through direct marketing methods.
Ease of Management
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Direct marketing provides greater control and accountability than other marketing methods. It is easy to
measure results because you know exactly how many people youve contacted in the first place. Once
youve run a direct marketing campaign and know the conversion rates involved, you can work on refining
and improving your success rates. Plus it also makes it easier to plan, forecast and budget for future direct
marketing campaigns.
Rapid Delivery
Direct marketing is both swift and flexible in achieving results. This is especially true for telemarketing, one
of the direct marketing tools, as the results of a conversation can be logged immediately and scripts adjusted
straight away to improve results.
Testing Capability
Direct marketing allows you to test, test and test again in order to hit upon the most successful combination
of direct marketing tools. Any of these variables such as timing, list, message, mailer and offer can be
adjusted, tested again, and measured to find the optimum direct marketing proposition.
Relationship Building
Direct marketing is far more effective at initiating and developing a meaningful dialogue with new
customers. From the outset you have a direct relationship with them, which can also be used as part of a
push pull strategy to stimulate demand for retailers.
Targeting of Messages
Direct marketing can enable you to target different messages to different recipients. Using technology such
as digital printing, its even possible to display different images, designs and offers in a direct mailer
according to who its being sent to, as well as personalising the mailer to the recipient to increase conversion
rates.
Geographic Targeting
Direct marketing can be used for any level of geographic targeting, whether its the local area surrounding a
shop or restaurant, regional targeting by postcode or county, national targeting and even international when
direct marketing can prove a far cheaper way of testing the market than a costly personal sales visit.
- Direct marketing involves direct business. So it is cost beneficial for consumers, as there is no price hike
due to wholesalers or retailers.
- Marketing executives can state certainly of the exact response to their products.
- The profit or loss can be more accurately judged.

4.7 WHAT ARE THE DISADVANTAGES OF DIRECT MARKETING?

- Sometimes, direct mailing offends the customers and many do not endorse it as they say it inhibits their
private lives.

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But most marketing managers are in support of this kind of business. The various forms in which direct
business is made are:
- Direct mailing: Here, paper mails are sent to the selected groups of people, who likely to give positive
response e.g. the paper mails of latest food processor is sent to all homes where house wives are resident so
that immediate response is seen. Also CDs can be used as demonstrating media.
- Email Marketing: Here, emails are sent to all the selected customer categories with repeated intervals of
time. But most of these are put into trash and spams. So the effectiveness of this form cannot be predicted.
- Telemarketing: In telemarketing, calls are made directly to the consumers and the concerned product is
advertised. People sit at call centers to sell products on behalf of their clients. But this form of direct
business is quite unpopular and most people oppose the uninvited calls. It was initially made illegal but later
on new laws were re-enforced and calls are now made only to those who don't mind them.
- Voicemail: Telemarketing created a lot of consumer opposition and consumers would abuse the ones
advertising on the phones. In order to avoid this, voicemail marketing was introduced, wherein; the entire
advertisement is digitally recorded and presented.
- Use of coupons: Coupons are attached to direct mails and sent to the consumers. These generally advertise
and give cost benefit to the consumers. So they avail these coupons and respond fast.
- Television marketing: Advertisements are given on the television and demos are with toll-free call back
numbers or certain websites for the consumer to get in touch with the manufacturers.
- Broadcast faxing: This is the least popular form of direct marketing. The ads are directly faxed to the
consumers.

4.8 THE BENEFITS OF DIRECT MARKETING TO CONSUMERS

Direct marketing benefits customers in many ways

It saves the time and introduce customers to a large selection of

merchandise. They can do

comparative shopping by browsing through mails catalogs and online shopping services .they can order for
goods.

Business costumer also benefited by learning about available products & services without tying up

time in meeting sales people.

4.9 THE BENEFITS OF DIRECT MARKETING TO SELLERS

Sellers can buy a mailing list containing the names & addresses of almost groups- doctors
- engineers
52

- chief executives of companies.

they can built a continuous relationship with each customer .

4.10 SCOPE OF DIRECT MARKETING

OPERATIONAL PERSPECTIVE
Research should focus on direct selling as a communication process. Hypotheses involving adapt ability,
negotiation; listening, trust-building, and various rhetorical and persuasive device could be tested in a direct
selling setting.
TACTICAL PERSPECTIVE
Under what condition (e.g. products or services sold, market targeted, competitive conditions faced) are
various tactical combinations most effective ? telemarketing , catalogs, electron merchandising.
STRATEGIC PERSPECTIVE
What about with direct selling in the future ?
Is direct selling emerging as the marketing strategy best suited to succeed with micro-market segmentation ?
OTHERS

.Marketing revenues is probably significantly underestimated.

There is a need for basis research on direct marketing.

Sales people and consumers who purchase through direct

selling.

The motivations of direct salespeople and customers

would appear to be a fertile area for research.

International and Comparative Analyses of Direct marketing.

CONCLUSION
Direct marketing is the use of consumer direct channels to reach and deliver goods and services to
consumers without using marketing middlemen. Direct marketing is one of the fastest growing avenues for
serving customers. More and more business marketer to direct marketing and telemarketing in response to
high and increasing costs of reaching business markets through a sales force.

4.11 BENEFITS AND DRAWBACKS MEASURED DIRECTLY

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Direct marketing is attractive to many marketers, because in many cases its positive effect (but not negative
results) can be measured directly. For example, if a marketer sends out one million solicitations by mail, and
ten thousand customers can be tracked as having responded to the promotion, the marketer can say with
some confidence that the campaign led directly to the responses. The number of recipients who are offended
by the junk mail/spam, however, is not easily measured. By contrast, measurement of other media must often
be indirect, since there is no direct response from a consumer.
Measurement of results
Measurement of results, a fundamental element in successful direct marketing, is explored in greater detail
elsewhere in this article. Yet since the start of the Internet-age the challenges of Chief Marketing Executives
(cmos) are tracking direct marketing responses and measuring results.
Privacy and environmental
Direct mail that is irrelevant to the recipient is considered junk mail, and unwanted email messages are
considered spam. Some consumers are demanding an end to direct marketing for privacy and environmental
reasons, which direct marketers, are able to provide by using opt out lists, variable printing and more
targeted mailing lists.

4.12 GROWTH OF DIRECT MARKETING

According to a study by the Direct Marketing Association quoted in Graphic Arts Monthly, direct markeing
sales to consumers grew at a rate of 8.5 percent per year between 1994 and 1999, while business-to-business
direct marketing sales increased by 11 percent over the same period. Jim Kobs, author of Profitable Direct
Marketing, identified several factors contributing to the rapid growth of direct marketing in the 1990s. First,
changing lifestyles were an important factor in the acceptance of direct marketing among consumers. The
number of women working outside the home jumped from 42 percent to 58 percent between 1980 and 1990.
Given less time to go shopping, many of these women found it convenient to select and examine
merchandise in their own homes. Direct marketing extends this convenience beyond mail-order shopping to
consumers receiving all kinds of offers in the homevia mail or commercial television, as is common today,
or via home-shopping networks, interactive TV, and the Internet.
Another factor contributing to the growth of direct marketing was the increased cost associated with personal
sales calls. By the end of the 1970s, the average cost of a single sales call was estimated to be about $137.
By the end of the 1980s, the cost had risen to more than $250 per call. An interesting application of direct
marketing now is to generate qualified sales leads that can be followed up with a personal sales call. Thus
direct marketing can make personal selling more cost-effective.
The growth of technology in general, and of computer-based technologies in particular, has also played an
important role in many areas of direct marketing. New computer technologies have allowed direct marketers
to be more precise in the analysis of results, in the targeting of messages based on more complex
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psychographics and demographics, in developing more sophisticated customer and prospect databases, and
even in the creative execution of direct mail packages.
Increased consumer acceptance of the telephone as a way to place orders has also helped direct marketing
achieve phenomenal growth. Coupled with telephone-based ordering are faster order fulfillment and the
elimination of delays previously associated with mail order. Today, placing an order by phone offers almost
the same "instant gratification" as picking up a piece of merchandise at the store. The same is rapidly
becoming true of purchases made over the Internet, although some consumers still balk at the perceived
security risks of transmitting personal and financial data online.
Other socioeconomic factors contributing to the growth and acceptance of direct marketing include a
population growing older, rising discretionary income, more single households, and the emergence of the
"me" generation. External factors include the rising cost of gasoline (at-home shoppers use less gasoline and
reduce environmental pollution), the availability of toll-free telephone numbers, the expanded use of credit
cards, the low cost of data processing, and the widespread availability of mailing lists.

4.13 FACTORS CONTRIBUTING TO THE GROWTH OF DIRECT MARKETING

IN INDIA
In the international market direct marketing has evolved through the catalogue route. It was the catalogue
marketer of the 1930s who set the pace, but it took direct marketing several decades to reach its present-day
multimedia, interactive modes status. In India, direct marketing was launched on the mail-order platform in
the 1950s.but the growth in the earlier days was sluggish and the practice was confined to only a product
categories. Most major developments in this area took place only after the consumer boom in the mid 1980s.
Direct marketing in India has since grown by leaps and bounds. With the advent of competition in the
1990s, several firms such as Philips, Telco, Titan and BPL who were earlier marketing their product through
conventional channels only are now turning to direct marketing to strengthen their marketing efforts and
increase their consumer base. They are integrating direct marketing with conventional distribution to get
closer to their customer.

4.14 THE FOLLOWING MAJOR FACTORS HAVE CONTRIBUTED TO THE

QUICK GROWTH OF DIRECT MARKETING IN INDIA:

Successful replication of overseas products and marketing practices in India.

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Eureka Forbes made history of sorts in India by successfully marketing vacuum cleaners through door-to
door selling. The firm had, in fact not done anything new. It had only been replicating here the strategy,
which was earlier used in the European markets quite successfully. Nevertheless, its success in India
provided a role model for other firms to emulate.

Change in the Indian business environment due to liberalization

Some major changes in the Indian business environment, especially after 1991, made the domestic markets
for many consumer and industrial products more competitive. For the first time, several business firms that
were well entrenched in their markets felt the heat of competition. It was now essential for them to get closer
to the customers to protect their markets. Many of them, such as Onida, HMV, BPL and Titan who were
selling their products only through agents and middlemen, switched to a parallel channel of direct marketing
by opening several exclusive retail shops. The aim was to keep in direct touch with the customers and
provide certain services that were not being provided by the middlemen.
Another objective of opening exclusive showrooms was to build an up-market image of the company by
demonstrating the full range of products. The ambience and dcor of the exclusive showrooms also helped
these firms in adding value to their brands. LML Vespa, Liberty shoes, Bausch& Lomb eye care products
and several others ventured into direct retailing probably due to this reason alone. Service firms such as ITC
Hotels and ANZ Grindlays Bank found direct marketing very effective in retailing customers and weathering
competition.

Middlemen getting stronger.

Several firms such as those in the publishing business, are now increasingly opting for direct marketing to
reduce their costs of distribution. Over the years, middlemen in India have become very strong and
demanding. In pharmaceuticals, IMFL (Indian made foreign liquor), packaged food and several other
industries, the market is in fact controlled by middlemen, who dictate terms to manufacturers. In the FMCG
category any new firm wanting to enter the market is virtually at the mercy of middleman. Because of
higher mark-ups the cost of distribution for products like soft drinks, confectionery, ice-cream and frozen
goods has gone up to the extent that in some cases it is even higher than the cost of production. If the trend
continues, it may prompt many more firms to check the direct marketing alternative.
Another reason for the spurt in direct marketing activities is that dealers usually push brands selectively,
depending upon their equation with the manufacturers. Therefore to protect their brands from discrimination
and to get direct aces to the market, more and more firms are now opening their exclusive showrooms,
especially in large cities and towns.
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Advent of cable television.

Proliferation of satellite television channels and the resultant rise in cable TV connections in urban and semiurban India has offered an excellent opportunity for marketing firms to exploit this new high-tech medium
for direct communication. Teleshopping firms such as Dee's Teleshopping, Teleshopping Networks (TSN)
and Asian Sky Shop (ASS) are now marketing jewellery, toys, cosmetics, watches, leisure products,
domestic gadgets, car finance and many more products and services through their small screen.
The USP of Teleshopping is the convenience of shopping from home and getting the goods delivered at
ones doorstep. The selection of products to be marketed through Teleshopping, therefore, depends largely
on the target audience and the timing of the programme. As this medium of retailing is relatively new to
Indian firms, companies are mostly concentrating on unique household items and targeting up-market
housewives.

large database maintained on computers

Computers have provided the real boost to direct marketing by facilitating maintenance of large database on
consumers. With the enormous computing power at their command, firms can now store update and use
large quantities of data for profiling and individualizing their customers. Computer based analytical
techniques such as non-parametric multidimensional scaling and perceptual mapping have helped firms in
segmenting their markets and targeting their customers.
Taking advantage of computing power, firms like Johnson & Johnson, for example have created a
database of more than 10,000 mothers in Mumbai, each with a baby less than two years old. They have
collected this data from hospitals and maternity homes. Nestle have carried out similar exercises in other
metros for its Cerelac brand infant food. ITC Welcome Group Ltd has complied a detailed database on all
CEOs and senior managers in the country. This included details about each individuals travel pattern,
destination frequently visited, and choice of food and accommodation. Telco is reported to have put together
an immense database on 145000 bus and truck owners around the country.
In fact, database-directed marketing has become a potent weapon for acquiring a competitive edge in
products and services where differentiation between brands is difficult. A bold, powerful and direct personal
communication that adds value to the product and establishes a lasting relationship with the customer is now
possible due to computerization. Ability to file, amend and retrieve data has changed the procedures,
prospects and profitability of direct marketing.

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4.15 DIRECT MARKETING STRATEGY

RMS has a value proposition which is unique in the direct mail print services marketplace. It is founded on
the experienced use of direct marketing strategy. Our account executives are experienced in determining and
understanding the performance drivers in a client's business, and linking these to direct mail program design.
To this end, our client engagements involve these activities:
1.

Program analysis

Reviewing past promotional programs with a focus on lists used, offers made, product positioning and copy
platforms, all for the purpose of finding what has positive and negative effect on outcome. Armed with this
knowledge, objectives are set with client collaboration, an actionable testing strategy is formulated, and a
program is outlined for execution.
2.

Offer development, and positioning

Using a core of experienced program strategists, and in collaboration with our clients, RMS can confidently
position products or services before select customer segments, and develop the offers and incentives
necessary to promote response. As well, the strategists give high level direction to our copywriters and artists
to design the most appropriate mailing piece. The program strategists are members of the Sales Department.
3.

Project Management and Account Management

The direct mail program is managed by teams of account coordinators experienced in the dynamics of direct
mail program design and management. They are accomplished at anticipating and avoiding unseen obstacles
to successful execution. The teams are located in the sales offices and in the manufacturing facilities.
4.

Response Analysis and Interpretive Reporting

Post program, clients turn over raw results information to the account executive team, and with support from
experienced program strategists results are read to clarify test results and validate findings. Based on these
analyses clients are advised on what factors to further test, as well as what programs are perfected for direct
mail roll-outs.
The RMS Sales Department takes the lead in developing direct marketing strategy, and holds a wealth of
experience and intuition for successful direct mail programs.

4.16 STRATEGIES FOR DIRECT MARKETING

Are you getting the most from your direct marketing? Make sure your direct marketing campaigns are target,
measurable, and ethical.
About Direct Marketing
As we discussed in Direct Marketing Fudamentals, direct marketing includes various approaches in which
the producer of goods or services directly contacts the end-user. Direct marketing encompasses face-to-face
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selling, direct mail, catalogs, kiosks, telemarketing, and more. Regardless of the form you choose, there are
some critical considerations.
Targeted Campaigns
The criteria for direct marketing begins with a reliable customer database. Other factors include offering
greater customer value through a more customized and personalized approach for product and service
offerings, distribution processes tailored to meet the needs of customers, and the opportunity to build
customer loyalty.
One of the first criteria for direct marketing is to have a consistent customer profile available which
describes the dominant target markets. This information must have sufficient detail to support a customer
database.
A customer database quantitatively captures the key characteristics of prospects and customers who are most
ready, willing, and able to purchase your product or service. It may offer demographic information about
their age, income, education, gender, and previous mail order purchases. In concert with this information,
this customer database identifies customers who possess these characteristics:

Have purchased most frequently

Purchased recently

Spend the most at each transaction

This database is used to accomplish the following.

Identify prospects

Decide when a customer needs a specific offer.

Enhance customer loyalty

Stimulate repeat purchases

Access to a customer database is the first step. The next set of criteria includes enhancing customer value
through one or more of the following factors:

Customized product and service solutions

Personalized interaction before or during the actual transaction

The development of expertise within an industry or based on specific issues

Individualized distribution processes accompanied by customized marketing offerings

When these criteria are met, the organization may be able to leverage areas of expertise, economies of scale,
and have the potential to build customer loyalty. An organization may be able to achieve greater target
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market precision through direct marketing than it can experience through a mass marketing or channel
marketing approach.
Before You Begin, Decide How to Measure
Successful direct marketing campaigns plan their efforts, determine their objectives, target their markets,
determine the offers key elements, test those elements, and establish measurements to assess the campaigns
success. Measuring your success is key.
Begin by gathering information about your fixed costs relating to overhead expenses and the variable costs
relating to how many pieces are going to be sent. Then prepare to track revenues generated. Each of these
areas offers valuable information to assess the results of the direct marketing campaign.
Conducting a simple break-even analysis can be a valuable tool in this process. For example:
Dental Data Co. is an organization that offers specialized patient management software to dentists. They
would like to determine what their break-even point would be if they mailed CD-ROM demos with printed
materials to 2,000 selected dentists. Their estimated expenses for the direct mail campaign follow.
This information will help determine what Dental Datas response rate needs to be to break even on the
campaign. The 43 units to break-even equates to a 2.15% response rate. This response rate is determined by
dividing the 43 units at break-even by 2,000, the total number mailed.
Therefore, if Dental Data does not have a response rate higher than 2.15% over the time period they have
determined, they will not realize profit from this direct marketing effort.
You can test the anticipated response rate, based on establishing a break-even sales point, to better
understand the possible combinations of potential results. Information regarding general direct mail response
rates, industry standards, or your past direct marketing experiences may be used to predict reasonable
response rates.
Analyzing your direct marketing campaign can allow you to steadily improve direct marketing performance.
If multiple direct mail pieces are used, analyze the response rates from each.
This measurement may consider the results that occur after the conclusion of the campaign. Some direct
marketing campaigns produce results months or years after the campaign has been assessed. Initial failure
may change into a successful campaign if results are tracked and measured over time.
Ethical Considerations and Responsibilities
Not all marketing is good marketing. It is important to recognize that some direct marketing techniques
contain negative attributes that impact the targeted group. This may include invasion of privacy, deception,
or fraud.
Invasion of privacy issues are often associated with telemarketing. How many long distance provider calls
have you received in the middle of dinner? Spam email messages sent to numerous computer mail
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addresses clutter inboxes. How many are you receiving each day? These activities can create negative impact
on a potential customer, and cost money that could be more effectively spent elsewhere.
Direct marketing can also involve using communication vehicles that exaggerate information and mislead
buyers through deceptive claims about a product size, performance, or price. Products that fail to meet the
claim, and nonprofit organizations that use funds for other purposes, are guilty of inaccurate or misleading
direct mail promotion tactics. In addition to creating a negative image, this kind of marketing can be legally
risky.
Consider the potential ramifications a direct marketing campaign may have on your product, service, and
organization when selecting, designing, and implementing the campaign.

4.17 FUTURE OF DIRECT MARKETING IN INDIA

The future of Direct Marketing in India is dependent on the following:
1) Reaching out to non-metro/non-urban market:
As metro and urban markets get saturated by products and services promoted in both general and
direct marketing models, the key to any direct marketing campaign lies in expanding its reach to rural and
semi rural markets. Infrastructural constraints have so far come in the way of the direct marketer. But with
rural cyber cafes, satellite television reaching rural areas, telecom booths and mobile telephony now gaining
popularity, it should be possible for the marketers to reach out to their target market in these areas. Indian
post offices are located in the farthest corner India and services villages with a population as low as 20
households. These offices can be used as an effective medium to communicate, deliver and even service the
rural consumer. IDBI, ICICI, SBI and other financial institutions are today directly marketing their mutual
funds and financial products through the Indian post offices. Thus, the key to success in the Indian market
lies in the firms ability to access rural markets.
2) Enhancing credibility of the offer:
The Indian customer generally does not buy the product or service until he/she has seen it, touched it and
experienced it. Therefore these are key ingredients in the customer selection process and the direct marketer
has to enhance his credibility as he cannot offer these benefits. Therefore, he needs to pay special attention to
ensuring that the customers experience with the product exceeds his/her expectations. Also he needs to
focus on service to endure speedy settlement of any claims. Credibility is the key to success in direct
marketing.
3) Wider use of debit and credit card:

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Direct Marketings success in India will be dependent on the wider use of debit and credit card as
mode of payment by both the customer and the marketer. This involves a shift of transactions from cash to
non cash modes and hence a change in the customers and the sellers mindset.
4) Emergence of specialized database firms:
Another key factor in the success of direct marketing is the evolution of specialized Database
firms. It is expensive proposition both in terms of money and time to create a customer database. This makes
direct marketing feasible only for large firms. A very large component of Indian economy consists of the
small and medium sized firms who cannot afford to create this database. Hence emergence and evolution of
firms specialized in database management will contribute to the success of direct marketing in India.

4.18 ANALYSIS OF CASES, WHICH SHOWS THE WORKING OF DIRECT

MARKETING.
CASE STUDY 1
Direct marketing of a blood pressure instrument
An electronic gadgets manufacturing firm wanted to market in India a small, hand-held electronic instrument
for measuring blood pressure at home. The price of the instrument was fixed at around Rs. 3000 a piece.
Being a specialty product, it was perceived to have only a limited clientele. As the firm had no establishment
channel of distribution, it decided to take the direct-marketing route. The product was unique in the sense
that it offered the convenience of constant monitoring of blood pressures at home, in office or anywhere,
without having to visit the doctor. It could save a lot of time and inconvenience, especially for busy
professional, executives, businessmen and all those who had a hectic work schedule. Since it was a relatively
expensive product, senior executive, professional and businessmen over 45 years of age, having an income
of more than Rs 15000 per month were expected to be the prospective buyers. The firm adopted the
following procedure for identifying and enlisting prospects.
In order to prepare a cold list, an advertisement of the product, along with a coupon, was released in two
leading newspapers in Mumbai. Interested individuals were asked to fill up the printed coupon, and send it to
the firm within 10 days to get a free booklet on management of blood pressure. Personal particulars relevant
to identifying the qualifying prospects such as income, age, profession, residential address and details of
any health-related problem were to be filled in the coupon.

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A majority of people who responded were found to be suffering from blood pressure, obesity or heart-related
problems. A cold list of about 5000 individuals was generated on the basis of filled-in coupons. This list was
further scrutinized and names of apparently non-serious responding who might have sent the coupons more
out of curiosity. The residual list of about 3500 respondents was treated as the hot list.
Another alternative to this newspaper ad approach, as suggested by the research agency was to obtain a list
of credit card holders from reputed banks such as ANZ Grindlays, Citibank, Canara bank, State bank of
India and Bank of Baroda. The firm could then have sort out the names of cardholders who were above the
age of 40 and occupied senior executive positions in private or public organizations. This would have formed
the cold list. Next, the firms could have sent a brochure and a personal letter to them offering to arrange a
free demonstration would have formed the hot list. However, this approach was not taken due to some
logistic problems.
The respondents were then clustered into different segments on the basis of their health status: those who
had only mild blood pressure but no other problem; those suffering from obesity and blood pressure both;
those suffering from blood pressure and some cardiac problems; those who had blood pressure and diabetes
with or without some cardiac problem; and so on. This database of all the listed people with their detailed
profiles helped the firm in identifying specific needs of the respondents.

CASE STUDY 2
Dial-a-computer
In1994, around one million corporate and individual users in America purchased computers by placing their
orders on telephone. The two direct marketing firms who have benefited most from this trend are Dell
Computer Corporation and Gateway 2000 Incorporated. Due to their long experience and established
reputation in direct marketing, both have together cornered around 15-20 per cent of the US$ 45 billion PC
business in the USA.

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In the 1980s, Apple, Compaq and IBM created quite a flutter in the market when they decided to sell their
PCs directly in phone. Most observers believed that customers would flock to the big brands and smaller
guys like Dell and Gateway would soon be run over by the biggies. But somehow, it happened the other way
round. Due to their lack of experience in direct marketing, the big brothers were unable to manage the new
mode of retailing properly and gradually pulled out of the sticky direct marketing business.
This now leaves Dell and Gateway with a 47 percent combined share of the total mail order PC business in
the USA. Many market analysts estimate their combined share to be70-80 percent by 1998. This amply
demonstrates that no firm can win the marketing game solely on the strength of its products image. The total
marketing strategy matters most.
It is also interesting to note that Dell and Gateway both made their debut in the computer business at lower
end of the market. They started with taking orders on telephone and delivering the values for money hone
PCs directly at customers door. But the scenario has now changed and mail order is a preferred mode of
shopping for the best quality products. Dells average customers spend around US$2,700 as compared to
US$ 2,400 spent by Compaqs customers.
Direct marketers assemble components into custom-configurated computers as and when phone calls come
in, and therefore carry far as the 10 percent dealer margin does not have to be paid. As a result, when the PC
market in the USA is growing at 15 percent per annum, these two firms are targeting a growth rate of 35-40
percent. Meanwhile, Gateway has also opener showrooms in Paris and Frankfurt to acquaint the European
shoppers with their product range. But both remain committed to marketing directly.

4.19 PRODUCTS MORE SUITABLE FOR DIRECT MARKETING

Industrial goods are traditionally sold through the companys own sales force. In case of high-value
Industrial products, such as machines, equipments, high-tech engineering goods, and projects where longterm standing in the market and one-to-one relationship with the customers are both important, direct
marketing may produce better results as compared to other approach.

Madras based medium sized

engineering firm, RKKR Steels has demonstrated that even construction grade steel products (such as bars,
angles and frames) can be marketed directly to builders, contractors and individual buyers.

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Services come next in the list of favorites for direct marketing. In service oriented business, retaining the
customers and getting repeat business is critical for the success of any venture. Perhaps because of this an
ever-increasing number of foreign and private sector banks, hotels, airlines, corporate hospitals, health clubs
and couriers firms are now banking more on direct marketing. Individual approach, as used in direct
marketing helps in creating customer loyalty, the backbone of service organization. In India, firms like ANZ
Grindlays bank, DHL Worldwide, ITC Hotels, NEPC Airlines and many more have benefited immensely by
direct marketing during the last couple of years.
Direct approach is also being used extensively in the marketing of financial products such as new issues of
share, fixed deposits schemes and mutual funds. Real estates and plantation firms like Anasals properties,
sterling Holiday resorts, Anubhav Plantation, teak Equity and many more have been making the most of
direct marketing. Nevertheless, direct marketing is Viable only if the margins in the business are high
enough to absorb the cost of maintaining regular contract with customers; otherwise it may turn out to be a
losing proposition.
The next category of products suitable fro direct marketing is high value, high involvement consumer
products such as expensive cars, jewellery, designer watcher and furniture, some specialty products that have
a small customer base, such as medical equipment, health care products and special application gadgets may
also be marketed by making direct contract with prospects.
High-value, low volume niche marketing items such as Single malt whisky, ray-ban sunglasses, Bausurch &
Lomb eye care products and premium blends of tea (e.g., editors Choice) are ideally suited for direct
marketing. Many such products like exercisers, executive diaries, new compact music disks; car accessories,
new kitchen appliances and expensive perfumes are normally not available at retail stores. Because of their
novelty value, these may evoke better respons3e if marketed directly to the consumers.
Amway Corporations list of items more suitable for direct selling includes cosmetics, vitamins, books,
cutlery, domestic electronic goods, air and water filters, clothing, food and wine, Kitchen appliances,
Kitchenware, cleaning products, toys and crafts, hobby items, hand tools, automobile accessories, as well as
an endless variety of catalogue items either unique to the company or sourced from third parties.
Direct marketing is also effective where the firm has a family of products to offer to the same person or
household. It is far more economical and makes better business sense to sell to the known customers rather
than finding a new customer every time. Some publication groups such as Living media and Spectrum
Communication, who offers a variety of publications for different tastes, have taken this route successfully.
Eureka Forbes benefited immensely from their database about the vacuum cleaner buyers, when they
introduced another novelty product(water purifier) in the market.
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With the advent of multinational brands in the Indian market, direct marketing may also penetrate into
lifestyle products categories such as fashion garments, perfumes, shoes, wristwatches and toiletries. ITC has
already shown the way by opening exclusive showrooms in a few select metros for its Classic brand
premium cigarettes and golf accessories.

4.20 GOOD STRATEGIES FOR DIRECT MARKETING

Strategies for direct marketing a product or service to the target customer would normally encompass the
following equally importance elements:

Planning the product offer

Pricing policy

Media strategy

Distributing

Evolving the basic strategy for direct marketing requires a careful study of the market and the product, and
logical planning.
Planning the product offer
A product offered through direct marketing may be one of the three types.

A product specifically developed for direct marketing

A product designed and priced exclusively for direct marketing is not available in retail shops or through any
other outlet. Its designing, packaging, pricing and positioning is normally done in a way that it may be
offered with or without some add-on attachments for free trail, and distributed directly through post or
courier. Bull work exerciser, cease fire extinguisher, editors choice tea and many others were developed (or
blended) specially for direct marketing. Several electrical gadgets, kitchen appliance, hand tools and fashion
items marketed exclusively but tale shopping organization are still not available through any other outlet.

A retail product adapted for direct marketing

A retail may be adapted with minor changes for use in direct marketing. There are several ways of making
such changes. Changing the packaging, accessories, attachment and even the brand name are some of the
common techniques of adoption. A multi-part product such as different volumes of an encyclopedia may be
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marketed as separate units. Dramatization of some features of product to make it look like different offer is
another way of adapting a retail product for direct marketing. For instance it is a no-frills, basic products, the
firm may stress on simplicity, user-friendliness and responsible price. On the contrary, if the product is
complicated and difficult to operate, you may stress on advance technology. Nash(1986) termed this strategy
as turning lemons into lemonade.
Another method of adapation involves repositioning the product on some different attributes or usage
patterns so that it looks like a different product. Nash (1986) calls it changing the product without changing
it. Anyone who doesnt believe this may have a hard look at some of the products currently being offered
through mail order and telescoping.

A retail product marketed without any modification through both conventional as well as direct

channels.
It is always possible for a firm to use direct marketing as an additional channel to market its products,
without making any change or modification in the retail version of the products. Most magazines, music
CDs, encyclopedia, premium whiskeys, exercising equipment, computers, etc., are usually marketed through
direct as well as conventional channels in identical forms and formats.
In the US markets, many computer firms are hawking their hardware with identical configurations by using
the conventional as well as direct route. This was explained in the previous case study.
Pricing strategy
In direct marketing, price is often used to spearhead the overall marketing strategy of the firm. Not only the
price but the way it is expressed is also very important. It may be quoted in several ways: as net price
excluding all accessories, freight and forwarding costs and taxes or as a package-deal price including all of
these; or with some additional offers such as free gifts, guarantee or credit offers. The telescope Network
(TSN), for example, offered BPL microwave oven to buyers in Bombay and Madras at the same price as in
the market, with free gifts of Borosil bowls.
A new product maybe launched with a special introductory offer, or at a low invitation price or special
subscription price, or with an opportunity to participate in some contest or sweepstake. Pricing strategy for
direct, marketing thus has to be flexible and adaptable to different situations.
Media strategy
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Media strategy for direct marketing may incorporate a logical testing plan with some calculated risk, to
exploit a productive campaign as quickly as possible. The media commonly available to direct marketers are
direct mail, press coupons, telephone, cable TV, and television and computer networks. Each of these has its
own merits and demerits. Press Coupon is gaining popularity because it is economical and gives quick
feedback. The advantage of direct mail lies in its highly individualized communication. The activities of the
firm therefore remains unnoticed by the competitors for a long time. Due to this unique benefit, many new
products in the West are launched through direct mail.
Direct markets may use different media depending on the nature of the product and the target audience.
Mumbai-based Burlingtons, for instance are currently using mail order catalogue; Music Today is using
direct mail; Shie perfume and Dollop ice-cream use the telephone. O & M Direct had earlier used television
to enroll volunteers for the national Literacy Mission Campaign.
In India, teleshopping is an emerging mode of direct marketing. The shape it will acquire in future will
depend more on how the current players perform. In order to increase the visual appeal and make the
communication more authentic and believable, the display of products is important; equally important is how
and by whom. TSN has therefore selected hosts whose images go well with the products with the products
they present. So, Priya Tendulkar (of Rajani fame) with her quality conscious housewife image
demonstrated kitchen appliances, Mandira Bedi with all her charm hosts jewellery shows, and health
products are hawked by sports star Mickee Mehta. These carefully selected hosts add the much-needed zing
to mundane selling and buying.

4.21 MAJOR DECISIONS IN DIRECT MARKETING

In preparing a direct-marketing campaign, marketers must decide on their objectives, targets, offer strategy,
various tests, and measures of campaign success. Here we will review these decisions.

Objectives:
The direct marketer normally aims to secure immediate purchases from prospects. The campaign success is
judged by the response rate. A response rate of 2% is normally considered good in direct marketing sales
campaign. Yet this rate also implies that 98% of the campaign effort was wasted.

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That is not necessarily the case. The direct marketing presumably had some effect on awareness and
intention to buy at a later date. Furthermore, not all direct marketing aims to produce an immediate sale. One
major use of direct marketing is to produce prospects leads for the sales force. Direct marketers also send
communication to strengthen brand image and company preference; examples include banks that mail
birthday greetings to their best customers. Some direct marketers run campaign to inform and educate their
customers to prepare them for later purchases; thus Ford send out booklets on How to take Good Care of
your Car. Given the variety of direct marketing objectives, the direct marketer needs to carefully spell out
the campaign objectives.
Target customers:
Direct marketer needs to figure out the characteristics of customers and prospects who would be most able,
willing, and ready to buy. Bob stone recommends applying the R-F-M formula

( recency, frequency,

monetary amount) for rating and selecting customers from a list. The best customers target who bought most
recently, who buy frequently and who spend the most. Points are established for varying R-F-M levels, and
each customer is scored; the higher the score, the more attractive the customer.
Direct marketers can use segmentation criteria in targeting prospects. Good prospects can be identifies on the
basis of such variables as age, sex, income, education, previous mail-order purchases, and so forth.
Occasions also provide a good segmentation departure points. New mothers will be in the market for baby
clothes and baby toys; college freshmen will buy computers and clothing and newly married will be looking
for housing, furniture, appliances and bank loans. Another good segmentation departure points are consumer
lifestyles. There are consumers who are marketers have targeted these groups and won their hears and minds.
Companies and industries 24-1 provides the survey findings of Japanese consumer who tended to purchases
through direct mail.
Once the target market is defined, the direct marketer needs to obtain names of good prospects in the target
market. Here is where list acquisition and management skills come into play. The direct marketers best list
is typically the house list of past customers who have bought the companys products. The direct marketers
can buy additional lists from list brokers. Manes on these lists are priced at so much a name. But external
lists have problems, including name duplication, incomplete data, obsolete addresses, and so on. The better
lists include overlays of demographic and psycho graphic information, in addition to simple addresses. The
main point is that the direct marketer needs to test in advance to know their worth.
Offer strategy:

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Direct marketers have to figure out an effective offer strategy to meet the targets needs. Nash sees the offer
strategy as consisting of five elements-the product, the offer, the medium, the distribution method, and the
creative strategy. Fortunately all of these elements can be tested.
Each medium has its own rule for effective use. Consider direct mail. In developing a package mailing, the
direct marker has to decide of five components. Each component can help or hurt the overall response rate.
The outside envelope will be more effective if it contains an illustration, preferably in color and /or a catch
reason to open the envelop, such as the announcement of a contest, premium, or benefit to the recipient.
Envelopes are more effectivebut more costly when they contain a colorful commemorative stamp, when
the address is hand typed or handwritten, and when the envelope differs in size or shape from standard
envelopes.
The sales letter should use a personal salutation and start with a headline in bold type in the form of a news
lead, a how/what/why statement, a narrative, or a question to gain attention. The letter should be printed on
good-quality paper and run for as many pages as are necessary to make the sale, with some indented
paragraphs and underlining of pertinent phrases and sentences. A computer type letter usually out pulls a
printed letter, and the presence of a pithy P.S. at the letters end increases the response rate, as does the
signature of someone whose title is appropriate and impressive. A colorful circular accompanying the letter
will also increase the response rate in most cases by more than its cost. The reply should feature a toll-free
number and contain a perforated receipt stub and guarantee of satisfaction. The inclusion of a postage-free
reply envelope will dramatically increase the response rate.
Consider on the other hand, a telemarketing campaign. Effective telemarketing depends on choosing the
right telemarketers, training them well, and incentivizing them. Telemarketers should have pleasant voices
and project enthusiasm. Women are a script and eventually move toward more improvisation. The opening
lines are critical. They should be brief and lead with a good question that catches the listeners interest.
The telemarketer needs to know how to end the conversation if the prospect seems to be a poor one. The call
should be made at the right time, which is late morning afternoon to reach business prospects, and the
evening hours between7 to 9 to reach households. The telemarketing supervisor can build up telemarketer
enthusiasm by offering prizes to the first one who gets an order to the top performer. Given the higher cost
per contact telemarketing, and privacy issues, precise list selection and targeting is critical. Clearly, other
media, such as catalog mail order, TV home shopping, and so on, have their own rules for effective use.
Testing direct-marketing elements:

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One of the great advantages of direct marketing is the ability to test under real marketplace conditions the
efficacy of different components of the offer strategy. Direct marketers can test product features, copy,
pric3es, media, mailing lists, and the like. Although direct-marketing response rates are at the single-digit
level, testing these components can add substantially to the overall response rate and profitability.
The response rate to a direct-marketing campaign typically understates the long-term impact of the
campaign. Suppose only2% of recipients of a direct-mail piece advertising Samsonite luggage place an
order. A much larger percentage became aware (direct mail has high readership), and some percentage
formed an intention to buy at a later date (the purchase will occur at a retail outlet). Furthermore some
percentage of the audience may mention Samsonite luggage to others as a result of seeing the promotion.
Some companies are now measuring the impact of direct marketing on awareness, intention to buy, and
word-of-mouth to derive a larger estimate of the promotions impact than is measured by the response rate
alone.
Measuring the Campaigns success:
By adding up the campaign costs, the direct marketer can figure out in advance the needed break-even
response rate. This rate must be net of returned merchandise and bad debts. Returned merchandise can kill
an otherwise effective campaign. The direct marketer needs to analyze the main causes of returned
merchandise, such as late arrival, defective merchandise, and damage in transit, not as advertised and
incorrect order fulfillment.
By carefully analyzing past campaigns, direct marketers can steadily improve their performance. Even when
a specific campaign fails to break even, it might still be profitable.
Suppose a membership organization spends $10,000 on a new-member campaign and attracts 100 new
members, each paying $70. it appears that the campaign has lost $3,000 (=$10,000-$7,000). Bit if 80% of
new members renew their membership in the second year, the organization gets another $5,600 without any
effort. It has now received $12,600 (=$7,000+$5,600) for its investment of $10,000. to figure out the longterm break-even rate one needs to figure out not only the initial response rate but the percentage who renew
each year and for how many years they renew.
This example introduces the concept of customer lifetime value. The ultimate value of a customer is not
revealed by the customers purchase during a particular mailing. Rather the customers ultimate value is the
profit made on all the customers purchases overtime less the customer acquisition and maintenance costs.
For an average customer, one would calculate the average customer longevity, average customer annual
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expenditure, and average gross margin, properly discounted for the opportunity cost of money, les the
average customers whose expected lifetime value the company wants to assess.
After assessing customer lifetime values, the company can focus its communication efforts on the more
attractive customers. These efforts include sending communications that may not even sell the customer
anythingbut maintain the customers interest in the company and its products. Such communications
include free newsletters, tips and birthday greetings, al serving to build a customer relationship.
Direct marketing has spawned a growing body of theory, measurement, and competent practice. It adds a
number of communication concepts and capabilities to the marketers toolbox. When tied to a carefully
developed customer database, it can increase sales and profit yields and strengthens customer relationship. It
can provide more accurate prospect leads and trigger new sales at a lower cost. Ultimately, marketers will
make direct marketing and database marketing an integral part of their marketing strategy and planning. Yet
they must do this responsibility.
4.22 CHANNELS OF DISTRIBUTION
Direct marketing use several channels of products to the target customers. Pioneers of direct marketing in
India have successfully tried door-to-door selling. This versatile mode of distribution can be used with equal
effectiveness for high-value gadgets such as water purifiers, specialty items such as health care products,
lifestyle products like perfume and cigarettes, as also for items of mass consumption such as detergent, toilet
soaps and eatable. The only problem is its high costs.
Mail order delivery has its limitations. It is more suitable for books, magazines, audio and videocassettes,
small gifts and specialty item such as fashion garments. Distribution through firms exclusive shops is more
suitable for up-market consumer product that requires selective distribution and /or efficient after-sales
services.

4.23 DSN GLOBAL TOP 10 DIRECT MAKETING COMPNIEYS

1. Avon Products, Inc.
2010 Revenue: $10.9 billion
Country: USA
Avon is the founder of modern direct selling and the acknowledged world leader in cosmetics, fragrances
and toiletries. Avons well-known product lines include Avon Color, Anew, Skin So Soft, Advance
Techniques Hair Care, Avon Naturals and mark.
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2009 Rank: 1

2009 Revenue: $10.3 billion

Marketing Style: Person-to-person

Compensation Plan: Single-level and multi-level

Products: Beauty, fashion jewelry and apparel

Markets: 100+

Distributors: 6.5 million

Employees: 42,000

Headquarters: New York, N.Y.

Executive: Andrea Jung

Year Founded: 1886

Stock Symbol: AVPNYSE

2. Amway
2010 Revenue: $9.2 billion
Country: USA
Amway, under parent company Alticor, offers Artistry cosmetics and skin-care products, Nutrilite nutritional
products and loyalty-inducing household products.

2009 Rank: 2

2009 Revenue: $8.4 billion

Marketing Style: Person-to-person

Compensation Plan: Multi-level

Products: Nutrition, beauty, personal-care and home-care products

Markets: 80+

Distributors: 3 million

Employees: 14,000+

Headquarters: Ada, Mich.

Executives: Steve Van Andel and Doug DeVos

Year Founded: 1959

3. Natura Cosmeticos SA
2010 Revenue: $3 billion
Country: Brazil
Natura is a cosmetics giant with more than 900 products. The company operates in Argentina, Chile, Peru,
Mexico, France, Venezuela and Colombia. Corporate social responsibility is one of its core emphases.

2009 Rank: 5

2009 Revenue: $2.4 billion

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Marketing Style: Person-to-person and retail

Compensation Plan: Bi-level

Products: Personal-care products and fragrances

Markets: 7

Distributors: 1 million

Employees: 5,000+

Headquarters: So Paulo, Brazil

Executive: Alessandro G. Carlucci

Year Founded: 1969

Stock Symbol: NATU3.SASo Paulo

4. Vorwerk & Co. KG

2010 Revenue: $2.9 billion
Country: Germany
Vorwerk is a family-owned company that has been focusing on the direct selling channel since 1930.
Products include household appliances and high-quality cosmetics. Vorwerk is a global group that includes
JAFRA Cosmetics, which reported sales volume of more than $600 million in 2010.

2009 Rank: 3

2009 Revenue: $3.5 billion

Marketing Style: Person-to-person and party plan

Compensation Plan: Multi-level (JAFRA Cosmetics)

Products: Cosmetics and home appliances

Markets: 61

Distributors: 600,000

Employees: 23,000

Headquarters: Wuppertal, Germany

Executives: Walter Muyres and Reiner Strecker

Year Founded: 1883

5. Herbalife Ltd.
2010 Revenue: $2.7 billion
Country: USA
Herbalife sells nutritional supplements and weight-management and personal-care products. Its products
have been developed by scientists, physicians and nutrition experts, including Nobel laureate in medicine
Louis Ignarro, Ph.D.

2009 Rank: 6

2009 Revenue: $2.3 billion

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Marketing Style: Person-to-person

Compensation Plan: Multi-level

Products: Nutritional supplements; health/fitness, wellness, skin- and hair-care; and weightmanagement products

Markets: 75

Distributors: 2.1 million

Employees: 4,300

Headquarters: Los Angeles, Calif.

Executive: Michael O. Johnson

Year Founded: 1980

Stock Symbol: HLFNYSE

6. Mary Kay Inc.

2010 Revenue: $2.5 billion
Country: USA
Mary Kay was founded by Mary Kay Ash with the goal of helping women achieve personal growth and
financial success. The companys skin-care and color cosmetics products are sold in more than 35 countries
around the world.

2009 Rank: 4

2009 Revenue: $2.5 billion

Marketing Style: Person-to-person and party plan

Compensation Plan: Single-level and multi-level

Products: Skin-care products and color cosmetics

Markets: 35+

Distributors: 2 million

Employees: 5,000

Headquarters: Addison, Texas

Executive: David Holl

Year Founded: 1963

7. Tupperware Brands Corp.

2010 Revenue: $2.3 billion
Country: USA
Tupperware is a global direct seller of innovative, premium products through an independent salesforce.
Product brands and categories include design-centric preparation, storage and serving solutions for the
kitchen and home and beauty- and personal-care products.

2009 Rank: 8
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2009 Revenue: $2.1 billion

Marketing Style: Person-to-person and party plan

Compensation Plan: Single-level and multi-level

Products: Storage and serving products; beauty- and personal-care products

Markets: Nearly 100

Distributors: 2.6 million

Employees: 13,500

Headquarters: Orlando, Fla.

Executive: Rick Goings

Year Founded: 1946

Stock Symbol: TUPNYSE

8. Oriflame Cosmetics S.A.

2010 Revenue: $2.2 billion
Country: Sweden
Oriflame is one of the fastest-growing beauty companies in the world. The company operates in 62 countries
and is the market leader in more than half. Although it has no U.S. presence, Oriflame has a presence in
Mexico, Central America, South America, Europe, Asia and Africa.

2009 Rank: 9

2009 Revenue: $1.8 billion

Marketing Style: Person-to-person

Compensation Plan: Multi-level

Products: Beauty products

Markets: 62

Distributors: 3.5 million

Employees: 8,000

Headquarters: Luxembourg, Luxembourg

Executive: Magnus Brnnstrm

Year Founded: 1967

Stock Symbol: ODI-SDB.STStockholm

9. Forever Living Products

2010 Revenue: $1.7 billion
Country: USA
Forever Living is the worlds largest grower, manufacturer and distributor of aloe vera, and this inspires
them to make environmental responsibility a priority. The company offers a complete line of aloe vera
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drinks, skin-care products and cosmetics, as well as a full line of nutritional supplements and products from
beehives.

2009 Rank: 10

2009 Revenue: $1.7 billion

Marketing Style: Person-to-person

Compensation Plan: Multi-level

Products: Aloe vera drinks, skin-care products and cosmetics, nutritional supplements

Markets: 142

Distributors: 9.3 million

Employees: Not available

Headquarters: Scottsdale, Ariz.

Executive: Rex Maughan

Year Founded: 1978

10. Nu Skin Enterprises, Inc.

2010 Revenue: $1.5 billion
Country: USA
Nu Skin Enterprises Inc. is a global direct selling company operating in 48 international markets throughout
the Americas, Europe and the Asia-Pacific region. Going far beyond cosmetics, toiletries and fragrances, Nu
Skin sells more than 200 products through three distinct brands: Nu Skin, Pharmanex and Big Planet.

2009 Rank: 11

2009 Revenue: $1.3 billion

Marketing Style: Person-to-person

Compensation Plan: Multi-level

Products: Personal care and nutritional products

Markets: 51

Distributors: 800,000

Employees: 1,200

Headquarters: Provo, Utah

Executive: Truman Hunt

Year Founded: 1984

Stock Symbol: NUSNYSE

4.24 THE MAJOR FUNCTIONS OF DIRECT MARKETING

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The major purpose of using direct marketing is to achieve a sustainable competitive advantage through
effective promotion and an efficient way of selling. However, the literature is characterised by a lack of
studies that address this issue, or determine the reasons for using direct marketing in general or what
functions direct marketing usually accomplish in particular. However, a few studies have focused on the
benefits or reasons for using direct marketing or one of its elements from the supply side. The following is a
brief presentation of the findings of these studies.
Thwaites and Shron (1994), in a study of the financial services industry, rank direct marketings benefits
based on their value to UK financial services institutions as follows:
1.

Cross-selling 44%.

2.

Lead generation for sales force 28%.

3.

Up-selling current and new products to existing customers 24%.

4.

Keeping customers sold on product/service 15%.

5.

Selling to new prospects 13%.

6.

Generation of retail traffic 8%.

Peltier et al (1994), in a study applied to private hospitals in the United States, identify the four most
important objectives of using direct marketing. According to Peltiers (1994) findings, these objectives rank
as follows:
1.

Increasing hospital awareness 70%

2.

Lead generation for current programs/services 64%

3.

Promoting special events 63%

4.

Image enhancement 57%

Another study that investigates ways of using and understanding the role of direct marketing is by Betts and
Yorke (1994) which tests 14 benefits of using direct marketing on a sample of 501 practitioners of direct
marketing from different industries in the UK. Betts and Yorke (1994) find that these benefits are ranked as
illustrated in the following table:
Rank Benefit of direct marketing

Mean

Std Dev.

Targeting precision

1.324

0.566

Testing markets

1.547

0.670

Testing offer (e.g. price)

1.575

0.712

Measurable and accountable

1.617

0.714

Provides new distribution channels

1.665

0.727

Testing products/services

0.757

0.796

Control over timing

1.776

0.796

Advertising cost effectiveness

1.790

0.800

More effective segmentation

1.820

0.759
78

10

Testing timing

1.916

0.865

11

Supports distribution channels

1.920

0.733

12

Testing creative

1.961

0.903

13

Testing format

2.079

0.908

14

Competitors are unaware of your activities 2.919

0.963

TABLE 4.1: RELATIVE IMPORTANCE OF THE BENEFITS OF DIRECT MARKETING

Where 1= extremely important and 4 not at all important. Source: Betts and Yorke (1994)
A survey study conducted by Direct Mail Information Service (1994), on 141 companies selected from the
top 3000 UK advertisers by advertising spend and other companies with a turnover between 1 million and
10 million, indicates that there are seven traditional reasons for using direct mail. These reasons are ranked
differently across different industries. However, as table 3-2 shows, the average rank of each reason in all
industries included in the study appeared as follows:
1.

Leads inquiries 84%.

2.

Customer loyalty 57%.

3.

Improve image 56%.

4.

Immediate sales 47%.

5.

Brand awareness 46%.

6.

Upgrade/Cross sell 33%.

7.

List/Database building 27%

Purposes
Leads/ Enquiries
Customer loyalty
Improve image
Immediate sales
Brand awareness
Upgrade /cross sell
List/Database
building

All
84
57
56
47
46
33

Fin
Ser
89
80
65
96
67
71

Ret
90
65
33
68
33
33

Press
leis
82
56
76
100
42
43

Non
Bus
Ser
90
47
47
86
38
26

27

18

33

63

39

Mfg Bus
Gds Ser Other
80
85
77
59
57
65
53
51
65
42
51
37
45
49
49
30
37
29
32

33

39

TABLE 4.2: PURPOSES OF DIRECT MAIL

.
According to these studies, the reasons for using direct marketing are different across the sectors in which
direct marketing is applied. However, there are some common factors that can be derived from the existing
studies. The most significant reasons are mainly either distribution or promotion purposes. For example,
reasons such as cross-selling, selling to new prospects, and immediate sales, can be considered as
distribution functions. Others, such as increasing awareness, image enhancement, promoting special events,
79

and lead generation for sales forces can be considered as promotional functions. In fact, recognising the role
of direct marketing as a form of promotion tool is not a problematic issue. The dominant theme in the
literature identifies direct marketing as a promotion tool (Booth 1992, Mercer 1992, Anderson 1993, Kotler
1998). However, the use of direct marketing as a distribution channel is still not widely acknowledged.
Certainly, direct marketing may be seen as a targeted advertising tool, but the message goes beyond that. In
fact, the message performs the entire selling job without intermediaries. A mail order advertisement, for
example, makes the sales without the benefit of a sales person, a checkout clerk, or even a store. So,
advertising and selling here are effectively bound together into a single function, which promotes, and
completes the transaction as well. In addition, the major components of direct marketing are direct mail and
mail order. Since direct mail by definition is an advertising medium and mail order is a distribution channel,
it is not surprising to claim that direct marketing involves distribution as well as promotion functions.
Looking at the practical side, a survey conducted by Mintel Centre (1994) shows that direct marketing is
heavily used by mail order catalogue companies and financial services firms (table 3-3). Insurance,
travel/hotel, bank/girobank, and Credit Card Companies account for 34% of consumer mail (Mintel Special
Report 1994). Mail order catalogue companies are intensive users of direct marketing. They had a 17% share
of the consumer letterbox in 1992 (Mintel Special Report 1994). Charities and book clubs account for 7.8%
and 4.4% respectively. All these sectors primarily use direct marketing as a distribution channel. Therefore,
if about 63% of direct marketing users use it successfully for this purpose, it will be permissible to accept the
claim that one of the major uses of direct marketing is as a distribution channel.
Katzenstein and Sachs (1986) suggest that the maintenance of a database is another direct marketing
function. However, maintaining the database is not a major function. It is a prerequisite for direct marketing
(Bauer and Miglautsch 1992, Murrow and Hyman 1994). Although organisations, whether they are direct
marketing or not, benefit from using databases, there cannot be direct marketing without a database. It is a
necessary means by which direct marketing achieves its functions effectively and efficiently.

Users
Mail order
Insurance
Bank/Girobank
Charity
Retailers
Manufacturers
Credit cards companies
Travel/hotels
Book club
Others
Total

M items
288
168
151
136
128
96
88
75
73
455
1,658

% volume
17.4
10.1
9.1
8.2
7.7
5.8
5.3
4.5
4.4
27.5
100

m
120
70
60
55
55
40
35
32
31
202
700

% value
17.1
10
8.6
7.8
7.8
5.7
5
4.6
4.4
29
100

TABLE 4.3: PRINCIPAL USERS OF DIRECT MARKETING

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Source: Mintel Special Report, Direct Marketing 1994.

After identifying the two significant functions of direct marketing, promotion and distribution, in the next
section, the discussion will be extended to present some examples of using direct marketing as a promotional
tool. In addition, a comparison between some of the major promotional tools and direct marketing will be
conducted to clarify the nature and the distinctive benefits of the approach.
4.25 PUBLIC AND ETHICAL ISSUES IN DIRECT MARKETING
Direct marketers and their customers usually enjoy mutually rewarding relationships. Occasionally, however,
a darker side emerges:

Irritation:

Many people find the increasing number of hard-sell direct-marketing solicitations to be a nuisance. They
dislike direct-response TV commercials that are too loud, too long and too insistent. Especially, bothersome
are dinnertime or late-night phone calls, poorly trained callers and computerized calls placed by an auto-dial
recorded-message player.

Unfairness:

Some direct marketers take advantage of impulsive or less sophisticated buyers. TV shopping shows and
infomercials may be the worst culprits. They feature smooth-talking hosts, elaborately staged
demonstrations, claims of drastic price reductions, while they last time limitations, and unexcelled ease of
purchase to capture buyers who have low sales resistance.

Deception and fraud:

Some direct marketers design mailers and write copy intended to mislead buyers. They may exaggerate
product size, performance claims, or the retail price. Political fundraisers sometimes use gimmicks such as
look-alike envelopes that resemble official documents, simulated newspaper clippings, and fake honors
and awards. Some nonprofit organizations pretend to be conducting research surveys when they are actually
asking leading questions to identify donors. The Federal Trade Commission receives thousands of
complaints each year about fraudulent investment scams or phony charities. By the time the buyers realize
they have been biked and alert the authorities, the thieves have fled to another location.
81

Invasion of privacy:

It seems that almost every time consumers order products by mail or telephone, enter a sweepstakes, apply
for a credit card, or take out a magazine subscription, their names, addresses, and purchasing behavior may
be added to several company databases. Critics worry that marketers may know too much about consumers
lives, and that they may use this knowledge to take unfair advantage. Should AT&T be allowed to sell
marketers the names of consumers who frequently call catalog companies 800 numbers? Is it right for credit
bureaus to compile and sell lists of people who have recently applied for credit cards? Is it right for states to
sell the names and addresses of drivers license holders, along with height, weight, and gender information,
allowing apparel retailers to target people with special clothing offers?
People in the direct-marketing industry are attempting to address these issues. They know that, left untended,
such problems will lead to increasingly negative consumer attitudes, lower response rates, and calls for
greater state and federal regulation. In the final analysis, most direct marketers want the same thing that
consumers want: honest and well-designed marketing offers targeted only to those consumers who
appreciate hearing about the offer.

4.26 SOME NEVER DIMENSIONS OF DIRECT MARKETING

Some emerging trends in direct marketing are telemarketing (marketing through telephone) and electronic
shopping. In India, suppliers of industrial components and materials catering firms and service organization
(such as hotels and transporters) have being booking orders on telephone since long. But telemarketing in an
organized for emerged only in 1990s new-concept products such as perfect ice and brands of established
firms such as lakme (shie) , Cadbury (dollops) and Shaw Wallace ( single malt whisky) were the earlier
practitioners of tele marketing. With the expansion of communication network this phenomena is catching
up fast. Citibank has come out with tele banking in the metros.
Television marketing is a Visual version of telemarketing. The marketers buy a time-slot on television to
demonstrate and describe the product, and customers can calla toll free number and order the product.
Private cable TV network are also being used for television marketing
Electronic shopping has two firms the videotext system permits a customer having interactive cable TV
connection to order products displayed on TV screen by operating a small terminal. Alternatively, he can
computer network to receive information about different products and their prices, compare various offers,

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choose the product and key in his product. Many firms have also started hawking their ware on the
worldwide computer web Internet.
Another significant development in the Indian context is the emergence of syndicated distribution network
services like the Bangalore based fresh force the organization has created a pool of about 15,000
educated and trained sales persons ready for hire by any direct marketing firm. In the beginning, only a few
publishing firms have shown interest, but if the experiment is successful several, consumer goods companies
may follow suit. More so because this is not only cost effective but also promises quicker cash inflow. More
recently, another distribution trend to hit the Indian market is multi-layered marketing (MLM), detailed as
part of distribution. But this may not exactly fit the definition of marketing. In the changing business
environment, direct marketing is an important alternative mode of approaching the customers. It make sense
for the companies to integrate direct marketing with conventional marketing, to keep track of the customers
and maintain regular contract with him. Not only will it promote a more customer-friendly and caring image
of the company, it will also facilitate creation of a long-term customer relationship. Firms such as Telco
Philips, titan and nestle, who otherwise their market through conventional channels have already developed
large database on their customers and maintain regular contract with them through direct communication.
With more and more firms realizing the value of retaining a customer, an integrated approach towards
marketing will gain more currency.

4.27 THE GROWING USE OF INTEGRATED DIRECT MARKETING

Although direct and on-line marketing are booming, a large number of companies still relegate them to
minor roles in their communication-promotion mix. Advertising and sales-promotion departments receive
most of the communication dollars and jealously guard their budgets. The sales force may also see direct
marketing as a threat when it has to turn over smaller customers and prospects to direct mailers and
telemarketers.
However, companies are increasingly recognizing the importance of integrating their marketing
communications. Some companies are appointing a chief communications officer (CCO) in addition to a
CIO (Chief Information Officer). The CCO supervises specialists in advertising, sales promotion, public
relations, and direct-on-line marketing. The aim is to establish the right overall communication budget and
the right allocation of funds to each communication tool. This movement has been variously called
integrated marketing communication (IMC), integrated direct marketing (IDM), and maxi marketing.
How can different communication tools be integrated in campaign planning? Imagine a marketer using a
single tool in a one shot effort to reach and sell a prospect. An example of a single-vehicle, single-stage
campaign is a one-time mailing offering a cookware item. A single-vehicle, multiple stage campaign would
83

involve successive mailings to the same prospect. Magazine publishers, for example, send about four
renewal notices to a household before giving up. A more powerful approach is he multiple-vehicle, multiplestage campaign.
For example, Compaq might launch a new laptop computer by first arranging new stories to stir interest.
Then Compaq might place full-page ads offering a free booklet on how to buy a computer. Compaq would
then mail the booklet to those who responded, along with an offer to sell the new computer at a special
discount before it arrives in retail stores. Suppose 4 percent of those who receive the booklet order the
computer. Compaq telemarketers then phone the 96 percent who did not buy to remind them of the offer.
Suppose another 6 percent now order the computer. Those who do not place an order are offered a face-to
face sales call or demonstration in a local retail store. Even if the prospect is not ready to buy, there is
ongoing communication.
Ernan Roman says that the use of response compression, whereby multiple media are deployed within a
tightly defined time frame, increases message reach and impact. The underlying idea is to deploy a sequence
of messages with precise timing intervals in the hope of generating incremental sales and profits that exceed
the costs involved. Roman cities a Citicorp-campaign to market home equity loans. Instead of usually only
mail plus an 800 number, Citicorp used mail plus coupon plus 800 number plus outbound telemarketing
plus print advertising. Although the second campaign was more expensive, it resulted in a 15 percent
increase in the number of new account compared with direct mail alone.
4.28 CUSTOMER DATABASES AND DIRECT MARKETING
Don peppers and Martha Rogers list the main differences between mass marketing one to one marketing
companies that know their individual customer customize their product, offer, message, shipment method,
and payment method maximize customer appeal. Todays companies are building customer database.
A customer database is an organized collection of comprehensive data about individual customer or prospect
that is current, accessible and for such marketing purposes as lead generation, lead qualification sale of a
product or service, or maintenance of customer relationship. Data base marketing is the process of building,
maintenances, and using customer database and other database (products, suppliers, and resellers) for the
purpose of contracting and transacting.
The marketing model for integrated marketing.
4.29 RAPP AND COLLINSS MAXI MARKETING MODEL CONSISTS OF NINE STEPS.
1.

Maximized targeting calls upon the marketer to define and identify the best prospects for offer. The
marketer either buys mailing lists or searches the customer database for characteristic that point to
84

high interest, ability to pay, and readiness to buy. Best customer includes those who buy with some
frequency, dont return many orders, dont complain and pay on time. Mass marketers can go fishing
for prospects with direct response advertising in such mass media as television, newspaper
supplements, and magazine insert card.
2.

Maximized media lead the direct marketer to examine the exploding variety of media and choose
those that allow for convenient two-way communication and measurement of results.

3.

Maximized accountability calls for evaluating campaigns on the base of cost-per-prospect response
rather that on the cost-per-thousand exposures.

4.

Maximized awareness involves searching for message that will break through the clutter and reach
the prospects hearts and minds by means of whole brain advertising that appeals tp a persons
rational and emotional sides.

5.

Maximized activation means that advertising must trigger purchase or at least advance prospects to a
measurably higher stage of buying readiness. Activation devices include statements such as send for
information and reply coupon must be returned by September 30.

6.

Maximized synergy involves finding ways of doing double duty with the advertising for instances,
combining awareness building with direct response, promoting other distribution channels and
sharing cost with other advertisers.

7.

Maximized linkage calls for linking the advertising to the sale by concentrating on the better
prospects and spending more on the total budget to convert them.

8.

Maximized sales through database building calls on the marketer directly to know customer by crossselling, upgrading and introducing new products. The marketer keeps enhance the database with
more customer information and ends ups with a rich private advertising medium.

9.

Maximized distribution involves building additional channels to reach prospects and customer- for
instance, when a direct marketer opens retail stores, or when a manufacture such as general food
decides to sell a premium brand of coffee directly to the customer.

Many companies confuse a customer mailing list with a customer database. A customer mailing list is simply
a set of names, addresses and telephone numbers. A customer database contains much more information. In
business marketing the customer profile contains the products and services the customer has brought; past
85

volumes, prices, and profits; tam member names (and their age, birthday and hobbies and favorite foods);
status of current contracts; an estimates of the suppliers shares of the customer business; competitive
suppliers; assessment of competitive strengths and weakness in selling and servicing the account; and
relevant buying practice, patterns and polices. In consumer marketing the customer database contains
demographics (age, income family members birthdays) psychographics (activities, interest and opinions),
past purchase, and other relevant information about an individual. For example the catalog company
Fingerhut possesses some 1,400 pieces of information about each of the 30million customer database.
Database marketing is mostly frequently used by business marketers and service retailers (hotels banks and
airlines) it is used less often by packaged goods retailers and consumer packaged goods companies, though
some (Quaker oats, Ralston Purina and Nabisco among them) have been experimenting in this area. A welldeveloped customer database is a proprietary asset that can give the company a competitive edge.
Armed with the information in its database, a company can achieve much more precision that it can with
mass marketing segment marketing or niche marketing. The company can identify small groups of customer
who receive fine tuned marketing offers and communication.

86

CHAPTER NO. 5
5. CONCLUSION
Organisations that are in markets for the short term have no reason to take much account of people's privacy
concerns. Corporate 'low-life' represents a problem for the community in this area, as in others.
Organisations that, on the other hand, seek to build and sustain brand-value, and which base their marketing
strategies on ongoing relationships with retail customers, need to take great care in the way in which they
approach direct marketing.
This paper has examined the privacy profile of direct marketing, and identified a wide range of forms that
seriously breach the expectations of consumers, and mainstream privacy principles. It has discussed how
legislators and regulators have failed to address, and are continuing to fail to address, consumers' concerns.
There is a prospect of serious backlash against marketers and marketing processes. This is particularly likely
in the context of the new electronic channels, which some seers would have us believe are the next wild,
unregulated and perhaps unregulatable frontierland.
Serious challenges confront financial services marketers. They will need to be very good, and in case they
can't, they will need to be very careful.

87

Direct Marketing is an interactive mode of marketing through which the marketer reaches out to his target
market at any location. Direct marketing helps companies to focus their marketing efforts, and hence to that
an effect is more focused and targeted than conventional or general marketing.
Teleshopping, home shopping channels, catalogue marketing and online shopping are some of the tools that
enable companies to cater to this core customer value. Therefore, database marketing is an interactive
approach to marketing, using all communication tools and media vehicles to reach to the target market.
Cross selling cal also be effectively managed through database marketing. This is especially true for firms
operating in several products/businesses and requiring the same database. The strengths of database
marketing are its ability to be measured, testes and customized.
The future of Direct Marketing in India is dependent on factors like reaching out to non-metro/non-urban
markets, enhancing credibility of the offer, wider use of debit and credit cards and the emergence of
specialized database firms.

Characteristics that distinguish direct marketing from other types of marketing are:

A database of names (prospects, customers, businesses, etc.), often with certain other relevant
information such as contact number/address, demographic information, purchase habits/history, and
company history, is used to develop a target market with common interests, traits or characteristics.
Generating such a database is often considered part of the direct marketing campaign.
Marketing messages are addressed directly to this list of customers and/or prospects. Addressability
comes in a variety of forms including email addresses, phone numbers, fax numbers, postal addresses,
and web browser cookies.
Direct marketing seeks to drive a specific "call to action." For example, an advertisement may ask the
prospect to call a free phone number, mail in a response or order, or click on a link to a website.
Direct marketing emphasizes traceable, measurable responses. It also emphasizes
maximizing response rates by testing while minimizing advertising expenses when engaging prospective
customers, regardless of the medium used.

88

5.1 AN EPILOGUE
Competition is an origin to Innovations and innovations germinates the seeds of a

successful and

prosperous dawn. Hence, Direct Marketing has become a key for a company to endure in this competitive
age.
Today, Customer is a King and their kaleidoscopic needs are enforcing the leading companies to emerge
with the unique new products. Even the increase in income level has altered demand and consumption
patterns of the urban consumers. The middle class people are looking for quality goods at reasonable prices.
This enunciate the significance of Direct Marketing in targeting the consumers and hammering them
continuously so as to help them get acquainted with the various new products.

5.2 ACKNOWLEDGEMENTS
This document has benefited greatly from the ongoing discussions on the link information infrastructure
policy e-list, and from feedback and comments from a number of people, including (in alphabetical order)
Robin Anson, Martin Bennett, Jason Catlett, Patrick Gunning, Ooi Chuin Nee and Robin Whittle. The
evaluative comments are mine.

5.3 REFERENCES:
1)

PRINCIPLES OF MARKETING:

PHILIP KOTLER
GARY ARMSTRONG

2)

MODERN MARKETING STRATEGY:

EDWARD C. BURSK
JOHN F. CHAPMAN

3)

NEW PRODUCTS AND DIVERSIFICATION:

PETER M. KRAUSHAR

4)

MARKETING MANAGEMENT:

RAJAN SAXENA

89