K.J.

SOMAIYA COLLEGE OF ARTS & COMMERCE

VIDYAVIHAR, MUMBAI-400077

PROJECT ON:
DIRECT MARKETING OF PRODUCTS AND SERVICES
B.COM (FINANCIAL MARKETS)
SEMESTER-V
(2016-2017)
SUBMITTED
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR THE AWARD OF THE DEGREE OF
B.COM -FINANCIAL MARKETS
BY
ARHAM KOTHARI
ROLLNO: 24
1

CERTIFICATE

This is to certify that Master.Arham Kothari studying in T.Y.B.COM

(Financial Markets), Semester V, ROLLNO. 24, for academic year 2016-2017 at
K.J.SOMAIYA COLLEGE OF ARTS AND COMMERCE has
successfully completed the Project on DIRECT MARKETING OF
PRODUCTS AND SERVICES under the guidance of Prof. HARESH
PARPIANI

MR. HARESH PARPIANI

(INTERNAL PROJECT GUIDE)

(EXTERNAL EXAMINER)

PROF. HARESH PARPIANI

DR. (SMT) SUDHA VYAS

(BFM CO-ORDINATOR)

(PRINCIPAL)
2

DECLARATION

I, ARHAM KOTHARI, the student of B.COM (FINANCIAL MARKETS)

SEMESRER-V (2016-2017) hereby declare that I have completed the project on
DIRECT MARKETING OF PRODUCTS AND SERVICES.
Wherever the data/information have been taken from any books or other
sources the same have been mentioned in bibliography.
The information submitted is true and original to the best of my knowledge.

STUDENTS SIGNATURE

ARHAM KOTHARI
(ROLL NO: 24)

ACKNOWLEDGEMENT

I take this opportunity with great pleasure to present before you this project on DIRECT
MARKETING OF PRODUCTS AND SERVICES which is a result of co-operation and hard
work. I would like to express my deep sense of gratitude toward all those people without whose
guidance and inspiration this project would never be fulfilled.
Im grateful to Mumbai University for giving me the opportunity to work on this project.
I would also like to thank our Principal (SMT).SUDHA VYAS for giving me such a brilliant
opportunity to present a creative outcome in the form of a project.
Any accomplishment requires the efforts of many people and this project is not different.
I find great pleasure in expressing my deepest sense of gratitude towards my project guide
PROF. HARESH PARPIANI, whose guidance & inspiration right from the conceptualization
to the finishing stages proved to be very essential & valuable in the completion of the project.
I would like to thank the library staff, and my classmates for their invaluable suggestions
& guidance for my project work. Last but not the least; Id like to thank my parents without
whose cooperation and support it wouldve been impossible for me to complete this project.

METHODOLOGY

The methodology of the study includes the selection of study/survey of library references
and the compilation of the primary and secondary data and information obtained through
structured questionnaires, and certain book references and articles studied. The methodology of
the study is to give brief overview of Direct Marketing of Products and Services.
Research methodology is done by collecting all sorts of information and data pertaining
to the subject in question. The methodology includes the overall research design, sampling
procedure and finally the analysis procedure.
The primary data has been collected with the help of knowledge acquired from internet,
books, newspapers and other forms of social media.

INDEX
NO.

TITLE

PAGE
NO.
8

WHAT I SMARKETING

INTRODUCTION

LITERATURE REVIEW

21

DATA PRESENTATION AND DATA ANALYSIS

35

MANAGING A DIRECT MARKETING CAMPAIGN

46

ADVANTAGES AND DISADVANTAGES OF DIRECT

48

MARKETING
7

DIFFERENCE IN MARKETING OF PRODUCTS AND

525

SERVICES
8

GROWING RELEVANCE OF DIRECT MARKETING

55

CHANNELS
9

HOW WILL TECHNOLOGY DIRECT MARKETING

56

EVOLVE IN NEXT 20 YEARS

10

CHALLENGES AND SOLUTION

59

11

HOW DIRECT MARKETING CAN CHANGE MARKETS

61

12

ETHICAL CONSIDERATIONS AND SOCIAL

62

RESPONSIBILITY
13

GOVERNMENT GUIDELINES FOR MLM COMPANIES

65

14

FUTURE

69

15

CASE-STUDY

71

16

CONCLUSIONS

72
6

17

BIBLIOGRAPHY AND WEBLIOGRAPHY

74

CHAPTER NO.1
1. WHAT I SMARKETING
Marketing are activities of a company associated with buying and selling a product or
service. It includes advertising, selling and delivering products to people. People who work in
marketing departments of companies try to get the attention of target audiences by using slogans,
packaging design, celebrity endorsements and general media exposure.
BREAKING DOWN 'Marketing'Marketing is everything a company does to acquire
customers and maintain a relationship with them. Even the small tasks like writing thank-you
letters, playing golf with a prospective client, returning calls promptly and meeting with a past
client for coffee can be thought of as marketing. The ultimate goal of marketing is to match a
company's products and services to the people who need and want them, thereby ensuring
profitability.The four P's of marketing are product, place, price and promotion.Product refers to
an item or items a business intends to sell. When examining a product, questions should be asked
such as, what product is being sold? What differentiates the product from its competitors? Can
the product be marketed with a secondary product? And are there substitute products in the
market?Price refers to how much the product is likely to cost. When establishing price,
considerations needs to be given to cost the unit cost price, marketing costs and distribution
expenses.Place refers to distribution of the product. Key considerations include whether the
product is going to be sold through a physical store front, online or made available through both
distribution channels?Finally, promotion refers to the integrated marketing communications
campaign. Promotional activities may include advertising, personal selling, sales promotions,
public relations, direct marketing, sponsorship and guerrilla marketing. Promotions are likely to
vary being dependent on what stage of product life cycle the product is currently in. Marketers
must be aware that consumers associate a products price and distribution with its quality, and
would be prudent to take this into account when devising the overall marketing strategy.

CHAPTER NO.2
8

2-INTRODUCTION
2.1-INTRODUCTION ABOUT DIRECT MARKETING
2.2- WHAT IS DIRECT MARKETING
2.3- MEANING OF DIRECT MARKETING
2.4- WHY DIRECT MARKETING?
2.5- WHY GO FOR DIRECT MARKETING?
2.6- HOW DIRECT MARKETING WORKS
2.7- DIRECT MARKETING MIX

2-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 behavior, 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.
2.1- 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.

10

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.
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 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 goaloriented 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,

11

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

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, catalogue-shopping 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

12

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 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

13

medium, one of several media that direct marketers utilize. Mail order is a distribution channel,
as are retail outlets and personal selling.
2.2-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:
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.
Another element is measurability of response. As mentioned above the number of
coupons received indicates the response rate to the marketers communication.
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

14

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-toone 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.
2.3 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 behavior 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

15

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.
2.4-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 house. Teleshopping, 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

16

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

2.5-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 full- time thing and make the most out of it.
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.
2.6-HOW DIRECT MARKETING WORKS
Direct marketing, as practiced by professionally managed firms is a four-step process:

Identifying prospects
Establishing contact
Booking the order

17

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 behavior, 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 behavioral 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.

18

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.
2.7-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:

19

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 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 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.

CHAPTER NO.3
20

3-LITERATURE REVIEW
3.1-DEFINATIONS
3.2-ORIGIN
3.3-PRINCIPLES
3.4-FOUR COMERSTONES OF DIRECT MARKETING
3.5-IMPLICATIONS OF INFORMATION IN DIRECT MARKETING
3.6-TYPES OF DIRECT MARKETING
3.7-BENEFITS
3.8-LIMITATIONS

3.1-DEFINATIONS

21

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.
3.2-ORIGIN
Mail order pioneer Aaron Montgomery Ward believed that using the technique of selling
products directly to the customer at appealing prices could, if executed effectively and
efficiently, revolutionize the market industry and therefore be used as a model for marketing
products and creating customer loyalty. The term "direct marketing" was coined long after
Montgomery Ward's time.
In 1872, Ward produced the first mail-order catalog for his Montgomery Ward mail order
business. By buying goods and then reselling them directly to customers, Ward was consequently
removing the middlemen at the general store and, to the benefit of the customer, drastically
lowering the prices. The Direct Mail Advertising Association, predecessor of the present-day
Direct Marketing Association, was first established in 1917. Third class bulk mail postage rates
were established in 1928.
In 1967, Lester Wunderman identified, named, and defined the term "direct marketing".
Wundermanconsidered to be the father of contemporary direct marketingis behind the
creation of the toll-free 1-800 number and numerous loyalty marketing programs including the
Columbia Record Club, the magazine subscription card, and the American Express Customer
Rewards program.

3.3-PRINCIPLES

22

A new customer is the most meaningful financial transaction you can make - instead of
thinking of the profit you make on a single sale - think instead of the annual worth of a new
customer to you. When your thinking is restricted to the profit you make from a one-time sale
there is insufficient encouragement for you to invest in the necessary campaign budget(s) to win
new customers. When you think in terms of the continuing annual value of the new customer,
you will have every encouragement to invest in winning more customers. Viewing customers
individually - is the key to relationship marketing
Principle 1 - The right objective
Set specific objectives for your short and long-term plans, because if you don't, you have
no yardstick with which to measure its success or failure.
Quantify your objectives.
When your objectives are clear, every element in your campaign or package should be
designed to lead the prospect towards the very action that you want him to take.
The method you employ to achieve your objectives will depend on the nature of your
product or service and the target market you want to reach.
Principle 2 - Your target market

It is the most important ingredient in your campaign?

Select your prospects with care, and select them with the same or similar
Profiles as your present customers.
The closer you are to your profile and target market, the more successful you will be.
It is better to send a poor package to a good prospect, than a good package to a poor

prospect.
Don't sell to everybody; sell to somebody!
Principle 3 - Your offer
The first step in planning an offer is to think about the objective of your campaign.
What do you want your present/past/prospective customer to do?
Buy your products, use your services, build traffic into your stores, ask for a sales
representative to call, enter a competition, etc.?
Always ask yourself - what is the big benefit my customer will gain from using or even
owning my product or service?
The right offer will get you immediate and more results.
Select the most attractive offer you can afford. Not all good offers are expensive.

23

Principle 4 - Your communication

Every part or element of your communication package (personal visit, phone call, letter,
fax, E-mail, whatever') must look and feel right to your customer.
'Dress it up.'
Use the AIDA principle: Your message must gain the customer's Attention from the start.
Involve him and arouse his interest. Develop that interest in to a strong Desire for
ownership and user ship and get the desired Action.
Principle 5 - Test/analyse and evaluate
You will never know how successful you are going to be. The only way is to test and test
continually.
Develop a control strategy or package, test, improve, analyse, improve, test, analyse, etc.
It is not the percentage response, which matters; it is the conversion of responses into
sales and the profit you generate from this contact.
Take time to ensure that you learn from all your experiences, good or bad.
Jock Falkson from Effective Letters always said: 'Remember you cannot bank a
response.'
Analyse the right things - and analyse it against your objectives.

Principle 6 - Costs and Budgets

Most, if not all, direct marketing activities are expensive and can erode profits quickly
unless kept under tight financial control.
Very few companies know what their cost per customer is. If you don't, it is essential that
you do so.
You may find that you have lost money on your first sale. But if you pursue it and go
after your customers and try to maximize their purchases you will win.
It is the lifetime value of a customer that is important.
The cost of servicing customers decreases over time.
The cost of each and every contact should be budgeted for (fixed and variable costs) in
advance, so that you can tailor it to maximize value for your rants invested.

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 All customers should have a profit and loss account with you. What he has spent with you
and what you have spent on him.
Principle 7 - Training of employees
All your employees should be briefed on all your marketing and advertising activities, in
order that they understand why you are doing it and what results you are expecting and
what results you have achieved. This is the only way that they will play their part to the
full.
Employees who is not adequately prepared or trained to support your programme or
handle your responses have ruined many successful contacts.
Loyal employees are linked to loyal customers.
Employee loyalty increases business profitability, competitiveness and market share.
Principle 8 - Co-ordination and communication
Successful campaigns depend on proper planning, co-ordination and communication of
all activities of all departments and divisions, which are likely to be involved in the
process.

Principle 9 - Programming and planning

Allow sufficient time for planning and execution. Plan ahead, but be flexible.
Percy Barnevik - Chairman, ABB Asea Brown Boveri, Zurich, said at a conference on
global competitiveness: "We don't need any more bright ideas. There are lots of them

around. In business, success is 5% strategy, 95% execution."

Take into consideration your company's policies, philosophies and activities.
Take into consideration all your employees and your team.
Do not forget your competitors.
Analyse and evaluate your programmes.
Remember that every mistake has a score and a cost.

Principle 10 - Frequency and priority

How many times do you have to see the same person to get a reaction, or how many
times do you have to mail to a person to get a result?

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 Nobody knows! What we do know is, that if you see 10 people and 1 reply, you have 9
uncommitted people.
There are various reasons why they haven't responded - circumstances, did not need your
product or service now, your approach, your package, etc.
All we know is - contact them again, and again, and again!
It is important to remember - if you have set clear objectives and you have qualified these
objectives in terms of numbers, you will know when to contact them again.
The longer you retain customers, the more profitable they become.
3.4-FOUR COMERSTONES OF DIRECT MARKETING
According to Holder (1998), there are four cornerstones of direct marketing. They are,

Continuity
Interaction
Targeting
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

26

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.
3.5-IMPLICATIONS OF INFORMATION IN DIRECT MARKETING
Significance of information to direct marketers: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
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.
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 nontransactional 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 cash back offers to
collect these non-transactional information about consumers.
3.6-TYPES OF DIRECT MARKETING

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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. It should be noted that these direct marketing
techniques are often integrated with other marketing techniques such as sales promotion and
public relations.

The major forms of direct marketing are the following:Direct mail marketing
Catalogue marketing
Telemarketing
Direct response television marketing
Kiosk marketing
New digital technologies
Online marketing
Face-to-face selling
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 organizational
markets.
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.
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.
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

28

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.
Kiosk marketing: A kiosk is a smalldvert standalone 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 along with ordering mechanism. Business marketers also
use kiosks to collect sales leads and to provide information at the trade shows
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.
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:
-

Research and planning tool

Distribution and customer service

Communication and promotion

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

29

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

Benefits to sellers
i. Accountable returns: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.
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.
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

30

trends. Direct marketing helps marketers in targeting precise market segments and therefore
more easily follow micro marketing strategies.
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.
v. Greater control and flexibility:
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.
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.
vii. Wide range of media:
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.
Benefits to buyers:
According to Kotler (2008), the consumers can get the following benefits from direct marketing.
i. Convenience and comfort:

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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.
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.
3.8- 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:

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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.
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.

33

CHAPTER NO.4
4- DATA PRESENTATION AND DATA ANALYSIS
4.1-CHARACTERISTICS OF DIRECT MARKETING
4.2-DATABASE DEVELOPMENT
4.3-CHARACTERISTICS OF A GOOD DATABASE
4.4-DATABASE MARKETING
4.5-THE STRENGTHS OF DATABASE MARKETING

34

4.6-SCOPE OF DIRECT MARKETING

4.7-FACTORS CONTRIBUTING TO THE GROWTH OF DIRECT MARKETING IN INDIA
4.8-MAJOR FACTORS HAVE CONTRIBUTED TO THE QUICK GROWTH OF DIRECT
MARKETING IN INDIA
4.9- DIRECT MARKETING STRATEGY

35

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 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.

36

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.
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.

37

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

38

to exploit opportunities and neutralize threats. The user id these tools should also help in
optimum resource utilization.
4.4-DATABASE MARKETING
Much direct marketing activity requires accurate information on customers so that they
can be targeted through direct mail or telemarketing campaigns. This information is stored on a
marketing database which comprises an electronic filing cabinet containing a list of names,
addresses and transactional behavior. Information such as types of purchase, frequency of
purchase, purchase value and responsiveness to promotional offers may be held in the database.
This allows future campaigns to be targeted at those people who are most likely to respond. For
example, a special offer on garden tools from a mail order company can be targeted at those
people who have purchased gardening products in the past. Another example would be a car
dealer, 334 Sales technique which by holding a database of customer names and addresses and
dates of car purchases could direct mail to promote service offers and new model launches. A
marketing database can also be used to strengthen relationships with customers. The database is
used to define market segments such as discount-driven price sensitive, foodies, heavy
category users and brand loyalists, testing response to promotions, and testing the effects of
different prices.
How retailers use marketing databases
At the heart of retail marketing databases are loyalty card programmes. These reward shoppers
by means of cash back or products offered on a points basis. Loyalty schemes allow customers to
be tracked by frequency of visit, expenditure per visit and expenditure by product category.
Retailers can gain an understanding of the types of products that are purchased together. For
example, Big Bazaar, Pantaloons, etc uses its Advantage card loyalty scheme (which has 14
million active members) to conduct these kinds of analyses. One useful finding is that there is a
link between buying films and photo frames and the purchase of new baby products. Because its
products are organized along category lines it never occurred to the retailer to create a special
offer linked to picture frames for the baby products buyer, yet these are the kinds of products
new parents are likely to want. Integrated marketing communications is possible using the
marketing database, as the system tracks what marketing communications (e.g. direct mail,

39

promotions) customers are exposed to, and measure the cost-effectiveness of each activity via
electronic point of sale data and loyalty cards. The retailers customers are classified into market
segments based on their potential, their degree of loyalty and whether they are predominantly
price- or promotion sensitive. A different marketing strategy is devised for each group. For
example, to trade up high-potential, promotionally sensitive, low-loyalty shoppers who do their
main shopping elsewhere, high-value manufacturers coupons for main supping products are
mailed every two months until the consumer is traded up to a different group.
The importance of database marketing is reflected in its applications:
Direct mail. A database can be used to store customer information for mailings.
Telemarketing. A database can store telephone numbers of customers and prospects. Also when
customers contact the supplier by telephone, relevant information can be held, including when
the next contact should be made.
Loyalty marketing. Highly loyal customers can be drawn from the database for special
treatment as a reward for their loyalty.
Campaign planning. The database can be used as a foundation for sending consistent and coordinated campaigns and messages to individuals and businesses.
Target marketing. Specific groups of individuals or businesses can be targeted as a result of
analyzing the database. For example, customer behavior data stored by supermarkets can be used
to target special promotions to consumers who are likely to be receptive to them, such as a
promotion for wine aimed at wine purchasers exclusively.
Distributor management systems. A database can be the foundation upon which information is
supplied to distributors and their performance monitored.
Marketing evaluation. By recording responses to marketing mix activities, for example, price
promotions, special offers on products and direct mail messages, the effectiveness of different
approaches to varying consumers and market segments can be evaluated.

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4.5-THE STRENGTHS OF DATABASE MARKETING

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.
3) Customization:
The database provides the firm with an opportunity to customize its communication with the
target market.
4.6-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?

41

OTHERS

Marketing revenue 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.

4.7-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.
4.8-MAJOR FACTORS THAT HAVE CONTRIBUTED TO THE QUICK GROWTH OF
DIRECT MARKETING IN INDIA
Successful replication of overseas products and marketing practices in India.
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

42

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.
Advent of cable television

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Proliferation of satellite television channels and the resultant rise in cable TV connections in
urban and semi-urban 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

44

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.
4.9- DIRECT MARKETING STRATEGY
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.
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.
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.
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.

CHAPTER NO.5
45

5-MANAGING A DIRECT MARKETING CAMPAIGN

The starting point for campaign management is the marketing plan: direct marketing
should be fully integrated with all marketing and promotional mix elements to provide a coherent
marketing strategy. In particular direct marketers must understand how the product is being
positioned in the marketplace in terms of its target market (where it is to compete) and
differential advantage (how it is to compete). These issues will fundamentally affect who the
campaign is targeted at and the persuasive messages used to convince the target consumer to buy.
Identifying and understanding the target audience. The target audience is the group of individuals
at which the direct marketing campaign is aimed. For consumer markets the target audience may
be described using market segmentation variables such as age, gender, social class and lifestyle.
Of particular importance is the use of geodemographic bases for segmenting consumers.
Population census data are used to classify households according to a wide range of variables
such as household size, number of cars, occupation, family size and ethnic background. Using
statistical techniques, small geodemographic areas (known as enumeration districts in Britain)
are formed that share similar characteristics. ACORN, the best known system, describes different
groups of households as Thriving, Expanding, Rising, Settling, Aspiring and Striving. Since each
household in each group can be identified by its postcode (zip code), direct mail can be targeted
at selected groups. For business markets, the target audience will be described as the type of
organisation that the direct marketer wishes to target and the type of individual within each
organisation who should be reached. The first type of decision will be aided by segmentation
based on such variables as organizational size, industry type, degree of purchasing centralization,
location and organizational innovativeness. Choosing the type of individual to select within the
organisation will usually be based on an analysis of the decision-making unit Often targeting will
then be based on job title. Once the target audience has been defined, a list is required that may
be obtained from an in-house database or through an external broker.
Direct marketers also need to understand the buyer behavior of the target audience. David
Ogilvy, a famous advertising guru, once wrote never sell to a stranger. What he meant by this
was the importance of understanding the needs and purchasing behavior of the target audience.
In particular, understanding the needs and choice criteria of targeted individuals aids message
development. For example, if we understand that price is an important choice criterion for our

46

chosen target audience, we can stress the outstanding value for money of our direct marketing
offer.
Setting campaign objectives
Campaign objectives can be set in different ways:
1. Financial objectives e.g. sales volume and value e.g. profit e.g. return on investment.
2. Communication objectives e.g. awareness e.g. stimulate trial e.g. positioning of brand in
consumers minds e.g. remind and reinforce.
3. Marketing objectives e.g. customer acquisition e.g. customer retention e.g. lead/enquiry
generation e.g. number of orders e.g. response rate (proportion of contacts responding).
Despite this spread of possible objectives it is true to say that direct marketing usually is more
concerned with making a sale with immediate action than with advertising. Linked to this
objective is the acquisition and retention of customers. Acquiring new customers is usually much
more costly than retaining existing ones
4. Also maintaining customer loyalty has the additional advantage that loyal customers repeat
purchase, advocate brands to their friends, pay less attention to competitive brands and often buy
product line extensions.
5. Therefore, direct marketers should pay at least as much attention to retaining existing
customers (and generating sales from them) as using tools such as direct mail and telemarketing
to gain new customers. When calculating the resources to be used to create new customers, the
concept of lifetime value should be used. This is a measure of the profits of customers over their
expected life with a company. Where lifetime value is high it can pay to invest heavily in
customer acquisition, particularly if customers once attracted tend to stay loyal. This is why
banks invest heavily in attracting students who in the short term do not have great value but over
their lifetime are very attractive propositions. Equally, companies are paying considerable
attention to retaining customers. This objective has spawned customer loyalty programmes such
as frequent flyer schemes (airlines) and loyalty cards (supermarkets).

CHAPTER NO.6
47

6-ADVANTAGES AND DISADVANTAGES OF DIRECT MARKETING

ADVANTAGES
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.
Sellers also benefit. Direct marketers can buy a mailing list containing the names of
almost any group: left-handed 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.

48

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
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,

49

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 personalizing 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.

DISADVANTAGES
1. Image factors. As we noted earlier, the mail segment of this industry is often referred
to as junk mail. Many people believe unsolicited mail promotes junk products, and others dislike

50

being solicited. Even some senders of direct mail, including Motorola, GM, and Air Products &
Chemicals, say they throw out most of the junk mail they receive. This problem is particularly
relevant given the increased volume of mail being sent.One study estimates the typical American
receives 14 pieces of junk mail per week. Another predicts that by 2007 consumers will receive
over 3,900 junk e-mails per year. In 2002 over 205.7 billion pieces of mail were sent in the
United States alone
Likewise, direct-response ads on TV are often low-budget ads for lower-priced products,
which contributes to the image that something less than the best products are marketed in this
way. (Some of this image is being overcome by the home shopping channels, which promote
some very expensive products.) Telemarketing is found to be irritating to many consumers, as is
"spam" or Internet junk mail.
2. Accuracy. One of the advantages cited for direct mail and telemarketing was targeting
potential customers specifically. But the effectiveness of these methods depends on the accuracy
of the lists used. People move, change occupations, and so on, and if the lists are not kept
current, selectivity will decrease. Computerization has greatly improved the currency of lists and
reduced the incidence of bad names; however, the ability to generate lists is becoming a problem.
3. Content support. In direct-response advertising, mood creation is limited to the
surrounding program and/or editorial content. Direct mail and online services are unlikely to
create a desirable mood.
4. Rising costs. As postal rates increase, direct-mail profits are immediately and directly
impacted.

CHAPTER NO.7
7-DIFFERENCE IN MARKETING OF PRODUCTS AND SERVICES
51

There is nothing like a "pure product" or a "pure service" in actual life; most of the time
they come bundled together. When you visit a restaurant, you look forward to the food (product)
as well as ambiance and experience (service).
1. WHO COMES TO WHOM: Products come to customers whereas customers come to
services. Product benefits are embedded inside the product / package and can be
transported to their customers through distribution channels. Services are location-based
and the customers need to travel to theses service locations or the service personnel has
to come to the customer location.
2. STANDARDIZATION OR CUSTOMIZATION? Customers like many of their
products to be standardized but they want most of their services to be customized. This is
also because a product can be pre-inspected whereas a service cannot be. A service needs
to be experienced and, when a customer is being serviced, it is natural for him to want it
customized based on his feedback.
3. QUALITY DELIVERY: The quality expected from a product is mostly embedded in
the product itself at the time of its manufacture and depends in turn on the quality of the
materials used and the setting of the machines. Both materials and machines, being
inanimate, can be standardized. On the other hand the qualities that people expect from
service are different : customization and variation is appreciated in service and this
depends a lot on the experience, skill and motivation of the service-giver on the spot.
4. TANGIBILITY: The products are tangible and can be inspected / sampled before
buying. Service on the other hand is experiential and sometimes based on a belief.
5. SCALABILITY: The product business is scaled up by expanding the manufacturing
capacity, distribution and sales reach, and access to more customers. On the other hand,
the service business is not easy to scale up - it needs a supply of trained service providers
and this involving either poaching people from the competitors or increased activity of
recruitment, induction, training and motivation. Attrition of trained manpower is a danger
to service business.
6. OWNERSHIP: A product (flat, car, and machine) can be owned and can go into your

52

balance sheet as an asset and is re-salable and you can accumulate it to build your wealth.
A service (degree, surgery, and haircut) cannot be owned as is always shown as an
expense. It is not resalable and cannot be transferred to someone else. Products begin as
materials and machines work on those materials to create improved / shaped /
transformed materials which are called products. Services begin from service givers and
improve / shape / transform objects (woodwork), bodies (surgery), and minds
(education).
7. THE SOURCE OF VALUE: The customers buy "products" essentially for the value
they find inside the box - whether a soap or a TV. On the other hand, the customers buy
"services" for the value of they find in the "encounter" with the service provider whether doctor, waiter or a consultant. The quality of the products depend essentially on
how materials are chosen and converted. The quality of the service depends on how the
service providers are selected, trained and motivated.
8. THE ROLE OF SENIOR MANAGEMENT: In product business the managers are
the heroes. In service business the front line employees are the real heroes. The process
of creating a market-driven design in a product business involves many months of work
by expert manpower and managers before the product is produced. These experts are
involved in doing the marketing work - doing situation analysis, formulated MVC,
deciding specs of material, machines, men and methods. A lot of expert work happens at
the back end over a long period of time before even a single product item is put into
market. On the other hand, the same process of creating a market driven design needs to
happen in front of the customer in few minutes in services. The front line - far away from
the HO - and without the luxury of experts and time is tasked with understanding the
customer and producing service to satisfy the customer.
9. THE POSITION OF THE CUSTOMER: In the product business, the customer is
outside the manufacturing process and hence two processes need to be created (1) The
process of bringing the voice of the customer in the process of product creation (2) The
process of physically taking the products to market where the customers are. In the
service business the customer is inside the business and cannot be ignored his requests
and demands force your front line service providers to understand and adapt to him. That

53

is why, in service business, it is worthwhile to treat the front line service givers as the
customers themselves.
10. THE ROLE OF STANDARDIZATION AND MECHANIZATION: In the product
business, a company proactively anticipates what the customer wants, frequently
standardizes its products, makes them to stock off-line (when the customer is absent) and
brings them through the supply chain to where the customers are. Mechanization is used
extensively in the processes. The machinery is used to process materials and machines. In
product business the role of the machines is primary and the role of the workers operating
those machines is secondary. On the other hand in the service business, a company is
managed in a reactive mode by asking customers on-line what they desire and then the
company tries to deliver it in an individualized manner in real time at the front line. Since
the value is created mainly through conversation, individualization and customization,
the role of employees is primary and the role of the machines is to assist the employees.

CHAPTER NO.8
8. GROWING RELEVANCE OF DIRECT MARKETING CHANNELS
54

Growth statistics released by the Direct Marketing Association (DMA) show that despite
the concerns about the prevailing macro economic conditions, spending for direct marketing will
continue to grow. As in the previous year, direct marketing-driven sales growth continues to
outpace overall economic growth (7.1% versus 5.1% for the year 2011). With 8.7% of US GDP
deriving from direct marketing, I think it is fair to say that direct marketing is one of the current
engines of economic growth for the US.
Online media continues to drive much of this growth. According to DMA, the share of
digital channels in the marketing budget is expected to increase from 19% in 2011 to 21% in
2012. The star of the show is mobile marketing, with an annual growth rate of more than 50%.
Other digital channels, such as social network marketing, search engine marketing and others
will all increase by over 20%.
What are the main reasons for this exponential growth in these channels? Well, the most
obvious is the growth of the internet and the social media channels it has spawned. As people use
the internet to communicate online, marketers do not want to be left behind. Secondly,
technological and computing tools such as computerized databases and the ability to slice-anddice the growing amount of consumer data available, allows marketers to develop niche-based
marketing along with highly targeted marketing messages to narrowly defined audiences,
resulting in close buyer-seller relationships.
The benefits of direct marketing and digital marketing initiatives have caused many
companies to jump right on to the direct marketing bandwagon. However, it is important to
realize that digital and direct marketing is a complex discipline and needs a well-thought through
strategy, along with investments in the appropriate tools and technologies in order to achieve
success. In addition, with the multiple marketing channels now available, it is critical to ensure
that there is no channel conflict, resulting in sales cannibalization or customer diversion. A strong
direct and digital marketing strategy that is well integrated with your traditional marketing
channel strategies will ensure that you are able to interact with all your customers, maintaining
relationships with old ones and building them with the new ones.

CHAPTER NO.9
9. HOW WILL TECHNOLOGY DIRECT MARKETING EVOLVE IN NEXT
20 YEARS
55

Many people would argue direct marketing is on the decline. The reality is, however, that
the principles and best practices of direct marketing are becoming more commonplace.
Technology is enabling direct marketing principles to be applied to a myriad of channels. As a
result, direct marketing best practices are currently being utilized in many measurable channels
across a number of different industries. Examples include call-to-action buttons in email, limitedtime retail offers and retargeted banner ads based on web user behavior. These are all current
channels leveraging the tried and true direct marketing best practices.
Direct marketing is predicated on being able to target, segment and tailor
communications to increase relevancy and drive action. It is a set of tools and techniques, such as
offers, incentives and expiration dates, to generate response and conversion. Direct marketing
and direct mail are not synonymous.
So what will the next generation of direct marketing look like? How will technology help
elevate the delivery of direct marketing practices? Here are some wild guesses. Some are a bit
aspirational, and some are probably even on many marketers wish lists.
1. Technology will enable offers and incentives to be behaviorally customized.
This might fall in the dream category, but wouldnt it be exciting if when a user hits a landing
page the offer could change? The offer could be based on other browsing history, previous
purchases or other behavioral information. Imagine you are shopping on a website and a
customized offer is made across three of the products you recently searched. Dishing up
behaviorally based offers could be a dream, or maybe with the advent of technology, a reality.
The use of offers and incentives is one of the fundamental direct marketing best practices that
span channels. Limited-time offers are a useful device for email, content marketing, landing
pages, digital lead generation and any other channel that is focused on generating an action.
Today we can do customized offers by segmentsmaybe tomorrow well be able to deliver
dynamically, behaviorally based offers and incentives.
2. Every communication includes a call-to-action, awareness-based communications
completely fade away.

56

Today marketers have a lot of pressure and budget accountability. This seems to be a trend, and
not a fad that will go away. The truth is that all communications work better with calls-to-action.
A direct marketing practice is to ensure a perceived sense of urgency. Urgency needs to be tied
directly to signing up or taking the action requested.
So, if digital banner ads, content marketing pages, email and other communications all work
harder with a defined and requested action, why would awareness-based communications need to
exist? In the future, technology will hopefully enable measurement regardless of medium. This
will require the definition of an objective that can be tied to an action, possibly diminishing the
appeal of awareness as an objective.
3. Floating expiration dates are used and change based on when the communications
are received, not sent.
One of the fundamental proven direct marketing best practices is to provide an expiration date.
Why would someone act now when procrastinating is so much easier? If the offer doesnt have
an end date, it simply wont be as effective.
Fast-forward fifteen or twenty years. Imagine expiration dates changing based on when the
recipient receives the communication. Rather than having fixed expiration dates, technology
allows that date to be customized around the user experience. So, if user 1 opens an email today
and user 2 opens the email three days later, the expiration date changes. Crazy sounding, but Id
hypothesize extremely effective.
A typical response curve demonstrates the power of expiration dates, showing that responses
tend to peak around the final days of any offer. Unfortunately, marketers cant optimize every
offer window around this learning. Marketers using direct mail have to account for USPS
delivery. Marketers using email recognize that it often takes multiple emails to drive action.
Being able to customize expiration dates around a user experience could have a significant
impact on response.
4. Measurement happens real-time.

57

Direct marketing was founded on the principle of measurement. One of the key direct marketing
best practices is to ensure a mechanism to measure results. This principle is now an expectation
across a number of different marketing channels.
Digital marketing channels have made measurement more accessible and efficient. Id argue that
in the future technology will make measurement easier and even more accessible. Enterprise
systems integrating and sharing information across platforms. Real-time updates being sent to
marketers via their mobile devices. Reams of information presented in a usable and consumable
format. Sounds dreamy, maybe 20 years is too soon, but sometime, hopefully, well get there.
5. Calls-to-actions follow eye patterns and navigational tendencies.
While many people read pages similarly, there are still differences in how we all consume
information. In the future, maybe well be able to understand how to tailor communications
around an individuals reading, navigation and eye patterns.
For example, wouldnt it be cool if the call-to-action could be customized on a page dependent
on your eye patterns? Before you feel dizzy, it wont necessarily change before your eyes.
Techniques like this one could be based on one of the fundamental direct marketing best
practices. Past behavior is a predictor of future behavior.
6. Targeting and relevancy truly get down to the one-to-one level.
A direct marketing best practice is to leverage segmentation and targeting to improve relevancy.
Generic communications that are mass-oriented arent employing direct or any form of response
marketing. Technology should continue to be an enabler in improving a marketers ability, from a
data and efficiency standpoint, to leverage personalization and relevancy.

CHAPTER NO.10
10. CHALLENGES AND SOLUTION
While many marketers recognize the financial benefits of increasing targeted awareness,
some direct marketing efforts using particular media have been criticized for generating poor

58

quality leads, either due to poor message strategy or because of poorly compiled demographic
databases. This poses a problem for marketers and consumers alike, as advertisers do not wish to
waste money on communicating with consumers not interested in their products.
Success of any Direct Marketing campaign, in terms of number of times the desired
response may vary between the best vs. the worst of the following parameters, depends on:
List or targeting (best targeting may yield up to 6 times the response, as compared with
the worst targeting)
Offer (best offer may yield up to 3 times the response, as compared with the worst offer)
Timing (best timing for the campaign may yield up to 2 times the response, as compared
with the worst timing)
Ease of response (best/multiple ways offered to respond may yield up to 1.35 times the
response, as compared with not-so-friendly response mechanism/s)
Creativity (most creative messaging may yield up to 1.2 times the response, as compared
to the least creative messaging)
Media employed. The medium/media used to deliver a message can have a significant
impact on responses. It is difficult to truly personalize a DRTV or radio message. One can
even attempt to send a personalized message via email or text message, but a high quality
direct mail envelope and letter will typically have a better chance of generated a response
in this scenario.
In sum, choosing the best of all the above parameters may yield up to 58 times more
response, as compared to choosing the worst of the above parameters. Addressing these helps
assuage the concerns of the marketers.
Some of these concerns have been addressed by direct marketers by the use of individual
"opt-out" lists, variable printing, and better-targeted list practices. Additionally, in order to avoid
unwanted mailings, members of the marketing industry have established preference services that
give customers more control over the marketing communications they receive in the mail.
The term "junk mail," referring to unsolicited commercial ads delivered via post office or
directly deposited in consumers' mail boxes, can be traced back to 1954. [7] The term "spam,"

59

meaning "unsolicited commercial e-mail," can be traced back to March 31, 1993, [8] although in
its first few months it merely referred to inadvertently posting a message so many times on
UseNet that the repetitions effectively drowned out the normal flow of conversation.
To address the concerns of unwanted emails or spam, in 2003, The US Congress enacted
the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act to
curb unwanted email messages. Can-Spam gives recipients the ability to stop unwanted emails,
and set out tough penalties for violations.[9] Additionally, ISPs and email service providers have
developed increasingly effective Email Filtering programs. These filters can interfere with the
delivery of email marketing campaigns, even if the person has subscribed to receive them, [10] as
legitimate email marketing can possess the same hallmarks as spam. There are a range of email
service providers that provide services for legitimate opt-in emailers to avoid being classified as
spam.
Consumers have expressed concerns about the privacy and environmental implications of
direct marketing. In response to consumer demand and increasing business pressure to increase
the effectiveness of reaching the right customer with direct marketing, companies specialize in
targeted direct advertising to great effect, reducing advertising budget waste and increasing the
effectiveness of delivering a marketing message with better geo-demography information,
delivering the advertising message to only the customers interested in the product, service, or
event on offer. Additionally, members of the advertising industry have been working to adopt
stricter codes regarding online targeted advertising.

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CHAPTER NO.11
11. HOW DIRECT MARKETING CAN CHANGE MARKETS
The three classic cases of how direct marketing can transform markets are Dell
Computers, First Directs entry into banking and Direct Lines move into insurance. Dell
Computers was founded in 1984 by Michael Dell in the United States. His conception was to
challenge existing players in the computers market by establishing a direct marketing operation
that would allow customers to dial Dell to place an order for a computer. The computer, which
was based upon customer specification, would be sent direct, eliminating the need for a
distributor. Just-in-time production means that computers can be manufactured in four hours.
Dell moved into internet marketing in 1996 and achieved over 14 million worth of web-enabled
revenue per day in 1999.
First Direct moved into telephone banking in 1989. Its success was based on customer
dissatisfaction with traditional branch banks that offered short opening hours, queues and bank
charges. By centralising banking operations and offering direct access by telephone, First Direct
was able to offer high levels of customer service at low cost. The new service offered 24-hour
access and free banking. The operation has proved to be a huge success, with the number of
customers far exceeding target and the highest level of customer satisfaction of any bank. Direct
Line saw a market opportunity in motor insurance.
Traditional insurance companies used insurance brokers situated in towns and cities to
provide the link to customers. Direct Line placed advertisements on television and in the print
media to persuade prospects to phone their telemarketing operation with the inducement of a
much cheaper quotation. The entire transaction is conducted over the telephone with the form
being sent to the customer simply for signature. By eliminating the broker, Direct Lines cost
structure enables it to reduce costs and pass on some of the savings to its customers. The success
of its motor insurance has led the company to move into related areas such as home and contents
insurance.

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CHAPTER NO.12
12. ETHICAL CONSIDERATIONS AND SOCIAL RESPONSIBILITY
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. 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 criticized by several authors
on ethical grounds. According to Sargeant and West (2001), following are the ethical grounds on
which direct marketing has been criticized.
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

62

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:
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 (2004), the specific privacy issues relating to direct and
database marketing area. 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 have real concerns about the environmental impacts
of direct marketing communications such as direct mail, leaflets etc. Since the response
rates are low, organizations use vast quantities of direct communications to get more
sales. The problem is further increased by the usage of glossy paper by many companies

63

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
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)
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.

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CHAPTER NO.13
13. GOVERNMENT GUIDELINES FOR MLM COMPANIES
To regulate the sale of goods and services outside of retail establishments otherwise
known as "Direct Selling (Multi Level Marketing)" and to provide for protection of consumers
who purchase goods and services from direct sellers, following guidelines are issued with the
approval of the Competent Authority. These guidelines will come into force from the date of
publication in official Gazette and will remain in force till an appropriate legislation is enacted
for the said purpose:1. Definitions: Direct Selling : Means marketing or sales of goods directly to the end user consumer using
word of mouth publicity, display and/or demonstrations of the goods/products, and/or
distribution of pamphlets. Explanation: Companies can open pick up points and delivery
points for maintaining effective delivery system.
Direct Selling Entity: Means a business entity as recognized by law for the time being in
force including but not limited to a Company duly incorporated under the Indian Companies
Act, a registered Partnership Firm constituted under the Indian Partnership Act.
Direct Seller: Means a person who is authorized by the Direct Selling Entity to engage into
the business of Direct Selling.
Consumer: An individual who buys goods or services for personal use and not for
manufacture or resale and shall have the same meaning as provided under the Consumer
Protection Act. 1986.
Goods/products: Goods/Products shall have the same meaning as defined in the Sale of
Goods Act and section 3(26) of the General Clauses Act, 1897, that is, it shall include every
kind of movable property other than actionable claims and money.
Sales Incentive: Sale incentive means share of profit payable to the Direct Seller for effecting
sale of goods/products as stipulated in the contract between the Direct Seller and the Direct
Selling Entity.

2. Conditions for Permissible Direct Selling:-

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 Should be a Direct Selling Entity, having sales tax/Vat, Income Tax, TDS and other license as
may be required as per the law/regulations of its principle place of business.
Should have bank account with at least one nationalized bank.
Partnership Deed or Memorandum of Association should clearly state their nature of business.
(Those who do not have such specific clauses should get their memorandum of Association or
Partnership Deed, as the case may be, amended within 2 months from the date of publication
of these Guidelines).
Pay sales incentive at the agreed rate within the agreed period.
Shall display names and Identification numbers of their authorized Direct Sellers in the
official websites.
Should have a consumer grievance cell that should ensure redressal of consumer grievances
within 7 days from the date of making such complaints.
Website should provide space for registering consumer complaints hassle free.
3. Appointments/Authorizations: Direct Selling Entity shall appoint/authorise Direct Sellers upon receipt and scrutiny of
application in a prescribed format.
An agreement recording terms of such appointment should be executed between the Direct
Selling Entity and Direct Seller.
No application should be considered unless such applicant is eligible to enter into a contract
under the Indian Contract Act.
Each Direct Seller shall be allotted Unique Identification Numbers before granting
license/permission to start Direct selling.
Direct Selling Entity should not give incentive to any persons for joining of Direct Sellers.

4. Prohibition: Payment of incentive by whatever name it is called unrelated to their respective sales volume.
Supply/Distribution of goods with the knowledge that such goods/products are inferior or

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exceeded its validity period as per the manufacturer.

Direct Selling Entity/Direct Seller will not indulge in money circulation scheme or any act
barred by the Prize Chits and Money Circulation Scheme (Banning) Act, I978.
5. General Conditions: MRP of the goods should be visibly displayed on the package.
Accounts of individual Direct Sellers shall be maintained properly and should be made
available through World Wide Web.
Sales incentive should be distributed to the respective Seller on or before the agreed due dates.
Goods sold by the Direct Selling entity should carry guarantee/warranty of the manufacturer.
However consumer should be given opportunity to exchange/return the goods if he finds any
manufacturing defect or the product purchased is not useful for the purpose it was meant,
within 30 days from the date of purchase, provided any seal/protection on the product is kept
unbroken.
6. Information Readiness (Ready Information file): Every Direct Selling Company should maintain a file with all relevant documents that include:
Certificate issued by Registrar of Companies, MOA and MOM.
Xerox copies of TIN, DIN of Directors, TAN, PAN.
Certificate of Sales Tax, Service Tax, CST Registrations.
Copies of all Sales Tax Returns filed with the authorities.
Copies of Service Tax Returns filed with the authorities.
Copies of IT Returns of company filed with the authorities.
TDS Statements of Distributors and respective challans paid.
Every Direct Selling Company should maintain KYC/KYDS (Know Your Customer/Know
Your Direct Sellers) as a mandatory process. Specific formats are to be provided on their
websites to be available for all at any time.
7. Grievance Redressal Mechanism:-

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 Every Direct Selling Company must have a complaint redressal mechanism to address any
problem of their customers/Direct Sellers.

8. Breach of Guidelines: The sale activities not following the above guidelines shall not be considered as Direct Selling
and would be dealt appropriately under relevant provisions of existing laws.
Kerala Is the First Indian State Who Has Made MLM Guidelines for MLM Companies In
India

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CHAPTER NO.14
14. FUTURE
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:
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

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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.

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CHAPTER NO.15
15. CASE-STUDY
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.
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.

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CHAPTER NO.16
16. CONCLUSIONS
Organizations 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.
Organizations 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.
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

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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 nonmetro/non-urban markets, enhancing credibility of the offer, wider use of debit and credit cards
and the emergence of specialized database firms.

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CHAPTER NO.17
17. BIBLIOGRAPHY AND WEBLIOGRAPHY
PRINCIPLES OF MARKETING: PHILIP KOTLER
GARY ARMSTRONG
MODERN MARKETING STRATEGY:

EDWARD C. BURSK
JOHN F. CHAPMAN

NEW PRODUCTS AND DIVERSIFICATION:

PETER M. KRAUSHAR

MARKETING MANAGEMENT: RAJAN SAXENA

WWW.WIKIPEDIA.ORG
WWW.MLMAGE.COM
WWW.INVESTOPEDIA.COM
WWW.ARIFSARI.NET
WWW.YOURARTICLELIBRARY.COM

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