STEP 5 Final

SUCCESS OF DIRECT MARKETING IN INDIA
CHAPTER: 01
INTRODUCTION TO
DIRECT MARKETING
TYBMS/BCCA’S INSTITUTE OF MANAGEMENT STUDIES 1

Introduction to Direct Marketing
Direct Marketing is a marketing process where companies market to

carefully targeted individual consumers with an appropriate, relevant and
timely offer or message using one or more advertising media to obtain an
immediate and measurable response or transaction.
Direct Marketers communicate directly with customers, often on a one-to-

one, interactive basis to build and cultivate long lasting customer
relationships.
Direct Marketers use detailed databases where they understand customer’s

demographics, attitudes, preferences and purchasing behaviors. With this
knowledge, they tailor their marketing offers and communications to the
needs of narrowly defined segments or even individual buyers.
Direct Marketing is also referred to as Interactive Marketing or Database

Marketing, because it is expected to be two-way communication with the
customer or prospect and it is database driven, where the database contains
customer demographics, attitudes, preferences and purchasing history and
behavior.
Beyond brand and image building, Direct Marketers usually seek a direct,
immediate,and measurable customer response. With digital advertising
mediums and e-commerce websites, it is possible to effectively track and
measure customer responses, if the customer looked at the offer, responded
to the offer by seeking more information, visited the marketer’s e-commerce
website, or placed an order, etc.
Early direct marketers used catalogs, direct mailers and telephone calls.
They gathered customer names and sold goods mainly by mail and
telephone. Today, with the advance in database and computer technology,
direct marketers are using new marketing media – the internet. Internet
provides several mechanisms - email, web advertisements and affiliated
websites to drive customers to marketer’s website or stores for sales.

CHAPTER: 02
INTRODUCTION TO
DIRECT MARKETING

Direct marketing in India
The mail service in India is slow though generally reliable. Telephone

service is poor, but rapidly improving. While private courier services are
growing strongly and the telecommunications sector is opening up for a
range of modern services, until goods can be ordered conveniently and
delivered with certainty, direct marketing will be limited to door-to-door
sales. An inefficient state-owned banking system also prevents prompt
transfers of funds from consumers to retailers. Credit card companies are
increasingly targeting India's one million cardholders through directly-
mailed offers of goods and services.
The most successful direct marketers in India today are the millions of
door-to-door sales representatives who visit neighborhoods and villages
across India. From ice cream vendors to carpet sellers, India's residential
neighborhoods are frequently visited by merchants offering a variety of
products. Some soft-drink companies have used beauty queens to make
surprise knocks on the doors!
Direct Marketing is especially popular in India because by nature Indians do

not trust claims made by most of the companies unless they have a first hand
experience of the product or a direct contact with the service offered by the
company. This has been proved in the past with the grand success of the
Eureka Forbes products in the Indian market. The Eureka Forbes products
were marketed purely through Direct Marketing efforts and have the largest
share in the cleaning products market in India.

CHAPTER: 03
DEFINITION

Definitions
Direct marketing is an interactive marketing system that uses one or more

advertising media to effect a measurable response & / or transaction at any
location.
1. Direct marketing is the planned implementation, recording, analysis

and tracking of customers' direct response behavior over time to
derive future marketing strategies, for developing long-term customer
loyalty and ensuring continued business growth.
2. Direct marketing is any activity that creates and exploits a direct

relationship between you and your individual customer.
3. Direct Marketing is the interactive use of advertising media to
stimulate an (immediate) behavior modification in such a way that this
behavior can be tracked, recorded, analyzed and stored on a database
for future retrieval and use.
4. Any Promotional activity that creates and exploits a direct relationship
between an organization and its prospect and / or customer as an
individual.
5. Selling via a promotion delivered individually to the prospective
customer
The definitions bring about 3 key elements:
Interactive system: - There is a 2-way communication between the marketer

and his/her target market. The response or non-response of the customer
completes the communication loop in DM process, e.g. the customer will fill
in the response coupon & mail it.
Measurability of response: - The number of coupons indicates the response

rate to marketer’s communication.
Direct Marketing activities are not location specific: - It is not necessary

for the marketer to interact physically with the customer. He / She can
establish contact through mail, phone, fax, or Internet

Direct marketing is a type of advertising campaign that seeks to elicit

an action (such as an order, a visit to a store or Web site, or a request for
further information) from a selected group of consumers in response to a
communication from the marketer. The communication itself may be in any
of a variety of formats including postal mail, telemarketing, direct e-mail
marketing, and point-of-sale (POS) interactions. Customer response should
be measurable: for example, the marketer should be able to determine
whether or not a customer offered a discount for online shopping takes
advantage of the

CHAPTER: 04
History and
Development of Direct
Marketing

History and Development of Direct Marketing
• 1948 – The first book catalog (Italy)

• 1667 – The first Garden Catalog (England)
• 1727 – Mail order library (USA)
• 1833 – customer buying clubs (England)
• 1905 – The first moderns Mail order catalog (UK)
• 1926 – The first book club (USA)
History
The term direct marketing is believed to have been first used in 1961 in a
speech by Lester Wunderman, who pioneered direct marketing techniques
with brands such as American Express and Columbia Records. 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.
The term spam, meaning "unsolicited commercial email", can be traced back
to March 31, 1993, 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.
Although Wunderman may have been the first to use the term direct
marketing, the practice of mail order selling (direct marketing via mail)
essentially began in the U.S. upon invention of the typewriter in 1867.
The first modern mail-order catalog was produced by Aaron Montgomery

Ward in 1872. 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.
Direct marketing's history in Europe can be traced to the 15th century. Upon
Gutenberg's invention of movable type, the first trade catalogs from printer-
publishers appeared sometime around 1450.

CHAPTER: 05
OBJECTIVES OF
DIRECT MARKETING

OBJECTIVES OF DIRECT MARKETING
Although there are many ways in which direct marketing can be applied, one
can break down all the activities into four simple categories. You can ask
people to:
1. Buy (or make charity donations) through the post, over the phone, or
off the TV set, either for cash or by quoting a credit card or account
number.
2. Ask for catalogues, or literature, or information, which may come
through the post, on the telephone or in the hands of salesmen (with or
without the consumer's prior knowledge).
3. Request a demonstration either in the home, at work, or even at the
seller's premises.
4. Visit a retail establishment, a film show or exhibition - or even a
political or community event.
To reach chosen objective, one can choose from a variety of routes. The
possibilities and permutations are bewildering, but it is essential that one is
aware of them all. A sale could never attain in one step, for example, could
be wildly successful if the product is broken down and sold in stages as a
continuity product, or if the sale is made by asking for an enquiry and then
following up repeatedly. Equally, a product could not sell easily for cash
might do very well if you offered it on free trial. So let's look through the
possibilities.
Ways of Achieving the Objectives

1. One stage selling
When people use the words "mail order' they usually think either of the
bargain spaces in the weekend papers, glossy colour advertisements in the
Sunday magazines, or those hard sell advertisements that promise to change
your life - or shape, or looks - overnight.
Some one-stage selling - the least sophisticated form of direct marketing
- is as simple as offering a product for sale in exchange for the full cash
price, to be sent in advance of the goods being delivered. However, as
you can appreciate, any way in which you can soften or delay the awful
moment when the customer actually has to part with money tends to pay
off. Nobody likes paying for anything; even less do they like sending

money off to someone they have never met for something they have
never actually experienced or held in their hands.
Thus one may offer:
 The Free Trial, where goods or services may be enjoyed on approval

for a period before the buyer is committed. Response leaps when use
this offer. You must, however, have a very efficient credit-checking
system since in some cases as many as 50 per cent of replies can be
bad debt risks.
 The Sale on Credit where only a down-payment is demanded. This is
a method worth using if you have the necessary facilities. However,
with the growth of charge and credit card usage it is becoming
increasingly restricted to less wealthy markets.
 The Sale on Credit where no down-payment is demanded. This is, of

course, the easiest payment option of all for the customer and thus the
method which will generate your greatest response. Once again, if you
have the credit-checking facilities and the financial resources to be
able to afford to wait for your money, this can be the most profitable
method of selling in the long run. Significantly, many of the most
successful Direct Marketers often use this method
 The conditional free trial where you may have to send all or part of
the money before getting the goods, but you are not committed to buy
until a certain period has elapsed.
 The sale by credit or charge card where any of the above four options
may also be offered. This is the easiest sale of all, because it's the least
painful way for your customer to pay.
2. The continuity relationship
Since all direct marketing businesses succeed best where there is a
continuing relationship between the buyer and the seller, many marketers
establish a contract with the respondent, which has a continuing
arrangement built in from the start. Typical are:

 Insurance offers, where the initial application may lead to a ten

or even twenty year contract.
 Loan offers, where people may be repaying for five years or
longer.
 Mortgage offers, which also end up in a relationship over a
number of years.
 Charity appeals or political appeals, where the group may
solicit a covenant (and in the case of many charities, this relationship
may last so long that the final payment will be after death, in a bequest).
 Credit Card applications, where the relationship may endure for
decades.
 Membership offers - such as those made by the Consumers’
Association or the Automobile Association which may endure until
death brings a merciful release.
 Club offers, where the respondent may be offered a very low
price for a selection of books or records or even a free gift to start a
collection of cookery cards, for example, and have to make a positive
effort to extricate himself from the relationship.
 Collector's offers, where one starts with the first of a series of
collectible items, and carries on through to the end, unless one wishes
to cease.
3. Multi-stage selling
Flexibility of a different sort governs the third category we are going to

consider - multi-stage selling. When you make a one-stage sale, then once
the prospect has either responded or not responded. Either you've made
money, or you've lost your chance to make money until the next time that
reader sees your ad or mailing.
Moreover, a one-stage sale predetermines the way in which the respondent

buys: either they react in the way you suggest at the price you quoted or
they don't. But multi-stage selling is much more flexible and in one form
or another is probably the area with the greatest potential for most
businesses.
Let us therefore look at some simple multi-stage operations:

 Sales follow-ups, where information about a product is advertised,

information is sent out and a salesman follows up. Common examples
in the consumer field are double glazing and other home improvements,
in business-to-business, computers, copying machines or typewriters
would apply.
 Retail combination, where a product may be advertised in the press
(or in a catalogue sent out by the store) and the respondent may go into
the store rather than buy direct.
 Catalogue offers, which may be divided into those where:
 the prospect sends for a catalogue to buy things from;
 the prospect sends for a catalogue for which he or she may
become an argent, deriving commission (savings);
 the prospect buys and is later offered the chance of becoming
an agent.
 Agent's offers, other than the ones outlined above, where the agent
will represent a given line of products and may or may not have to buy
the merchandise in advance, with or without a guarantee of money back
if the goods are not sold successfully.
 Recruitment, where the respondent replies to an ad, gets information
and then goes for
an interview (as with the armed services) or may go directly to an

interview.
Finally, two more multi-stage operations:
 Franchise offers, where the respondent sends for details,
meets the company or its representative, and may end up going into
business with them.
 Sequence selling. There are many cases where you can afford
to be quite patient in getting a sale. You can afford to try and mould
people's opinions about your product or service before actually going in
for the kill.
The simplest form of sequence probably would be where you send out an
advance mailing or make a telephone call to say you are going to make a
very generous offer to someone; you then make the offer; and then you
may follow up with another call or mailing to remind people to take
advantage of the opportunity before it lapses.

This sort of approach is particularly appropriate for a profession like

accountancy, the law or advertising. People do not wake up every morning
and decide they need a new advertising agency or lawyer. You are simply
trying to make sure that when they do have to make such
a decision, they will choose in your favour.
5. Sales promotion linked opportunities.
Many companies - perhaps most companies that are reasonably

sophisticated - make offers of one kind or another, which can with a little
ingenuity be turned into direct marketing opportunities.
What they all have in common is that a list of names can be generated.
Names can be very valuable. So if your company is engaged in any of the
following activities, you have a direct marketing opportunity:
 Competitions, where the respondent may or may not have to
offer proof of purchase.
 Discounts and free offers, where a coupon may have to be
redeemed at the store, or by post. These may be offered in
advertisements; in the package, as with a cigarette pack, or on the back
of the pack as with sugar cartons.
 Self-liquidating offers, where a product may be offered cheaply
as long as you prove you have purchased the brand.
 Direct offers of merchandise bearing the brand name, as with
offers of lacoste sweaters, or Nirmal Sarees, or Amul T-shirts.
In all these cases, either direct contact is involved, or it can be

introduced. Thus, for instance, if you are running an advertisement which
bears a redeemable coupon, then if you require that people give the
name and address when redeeming that coupon you are able to capture a
name and address.
In fact, one of the most powerful weapons at the direct marketer's

disposal has come about as a result of this sort of activity. This is the
building of large files of consumers with details about their brand
preferences, household characteristics and purchasing patterns in-
corporated.

CHAPTER: 06
PRINCIPLES OF DIRECT
MARKETING

PRINCIPLES OF DIRECT MARKETING
1. Planning your marketing activity: All direct marketing should form

part of a controlled marketing strategy, which has been produced as a
result of market and competitor analysis and in relation to achievable
objectives.
2. Targeting your customer: Customer information should be stored and

capable of manipulation and retrieval from your customer database, to
contact your existing customers. Analysis of this also helps you to
identify characteristics of potential future customers.
3. Measuring your marketing activity: The results of direct marketing

should be measured to tell you what works and what doesn't.
4. Tracking This involves monitoring customers' responses over time,

ideally for as long as your relationship with them lasts. This enables
you to measure their value and understand how much of it is a result
of how you marketed to them is.
5. Customer behavior: Tracking the spending patterns and general

behavior of your customer can help you establish which products are
popular and which aren't. This can help you determine future products
and strategy.
6. Future strategies: One aim of marketing is to maximize the value of

your customers to you. So the previous steps will ensure you have the
information to plan effective and efficient marketing to achieve this
aim.
7. Developing long-term loyalty: By targeting the right customers,

offering them what they want and encouraging them to take more of

your products, you will protect your customer database. Your

customers will be more likely to stay with you for longer.
8. Encouraging profitable business growth. Increasing the number of

loyal and valuable customers you have and limiting the number of
customers with low value and/or high risk achieve this. This increases
turnover and profit, which can be reinvested to ensure that service and
product standards are maintained and that your customers stay happy.

CHAPTER: 07
APPROACHES TO
DIRECT MARKETING

APPROACHES TO DIRECT MARKETING
1. Stand-Alone Direct Marketing

This could be regarded as the “ultimate" Direct marketing approach.
Organizations that employ this type of approach employ no other means to
manage the relationship with their customers. Companies such as ‘First
Direct’, ‘Direct Life insurance’ or “Bazee.com” fall under this category.
Here the customers are directly recruited via direct response press
advertising, direct mail or the internet. There after, the relationship is
managed using a combination of telephone, mail, e-mail etc.
2.Integrated Direct Marketing

In this approach Direct Marketing is viewed as a part of an integrated
marketing mix. Organizations such as 'Save the child', 'Readers Digest',
‘Pizza-Hut’ are seen to adopt this approach.
Peripheral Direct Marketing

In this type of approach, Direct Marketing is employed as only an
occasional, tactical marketing tool. Here direct marketing could be initiated
as a short-term response to decreasing sales or competitive pressures.
Hindustan Lever and many other FMCG companies adopt this form.
First impressions mean everything with direct mail. Your goal is to
keep your piece out of the trash bin as long as possible. If certain guidelines
are followed, chances are you can benefit from a response rate of 5 percent
or higher, considered above average in the industry.
Make an offer
Your direct mail piece should make it easy for customers to recognize your
offer or "hook." Typical offers include a free demo CD-ROM, informational

brochures or product/service coupons--in general, anything that will

encourage your audience to take action.
It's your responsibility to determine what you want to accomplish with a
direct mail piece, and then design an offer around that goal. The offer or at
least the hint of an offer should be easy to find.
Keep it short
In direct mail, short snippets are the way to go. Long blocks of text lose your
reader's interest. While copy is an important component, be sure to keep it
succinct. Think of direct mail copy as you would a newspaper or magazine
headline. Include a teaser line on the envelope or cover that should be
treated as your headline. For example, if you are marketing the release of a
brand-new style of rolling pin, your headline could read, "Our Rolling Pin
Will Make Your Life Easier."
The body text of the direct mail piece should be brief, yet informative. The
use of bullet points is highly recommended because it effectively
summarizes the high points of a business or product. Important contact
information should be bold or set apart.
Graphically speaking :Generally, the graphic elements in your direct mail

piece will not make or break a sale, but appearance can encourage a
potential customer to look at the entire direct mail piece.
* Do include a picture of the product on your direct mail sales piece.
Do print in four-color if your budget allows it. You can always print the
cover or envelope in four-color process to draw attention and then print the
inside in two-color.
* Don't let the offer or copy get lost in the graphic elements.
* Don't be afraid of white space. Multiple graphics and words overwhelm
customers. Simple is better.
Direct mail will remain an effective marketing tool in the e-commerce era,
and your piece is more likely to be successful if you have an attractive offer,
effective copy and easy-to-follow graphics.
The direct marketing must give consumers a reason to visit your business’s
location or website. Always include some type of call to action. That action
may be to visit the website, visit the offline store, or participate in a

walkathon. It could be anything. Just make sure that the person who receives
the direct marketing understands that you want them to take action. Increase
your call to action response by including an offer. Limited time offers,
special savings, and contests all persuade customers to take action.

CHAPTER: 08
DIFFERENCE BETWEEN
MASS MARKETING AND
ONE-TO-ONE
MARKETING

DIFFERENCE BETWEEN MASS MARKETING AND ONE-

TO-ONE MARKETING
MASS MARKETING ONE TO ONE MARKETING
Average customer Individual customer

Customer anonymity Customer profile
Standard product Customized market offerings
Mass production Customized production
Mass distribution Individualized distribution
Mass advertising Individualized messages
Mass promotion Individualized incentives
One way communication Two way communication
Economies of scale Economies of scope
Share of market Share of customers
All customers Profitable customers
Customer attraction Customer retention
If you are ready to get the word out about your business, one of the steps that
you need to do is to select the right media where you will advertise and
Promote your business.
For a small business, every Rupee is precious. Small businesses do not

advertise for the sake of advertising. Instead, they want to get the most
return for their investment. Your advertising campaign should translate to
greater sales, more response and healthier bottom line.
• An important step to developing your sales and marketing plan is to

select the right media to send out your message. There are no hard-
and-fast rules as to which media is better. The right media for one
business may be wrong for another.

CHAPTER: 09
ADVANTAGES OF
DIRECT MARKETING

ADVANTAGES OF DIRECT MARKETING
1. Home shopping is fun, convenient & hassle free.

2. Saves time
3. Introduces customer to a large variety of products at a time.
4. Comparative shopping is possible by browsing through mail
catalogues & on line shopping.
5. Customers can order goods for themselves & for others also.
6. Sellers also benefit, as they can personalize & customize messages.
7. Direct marketers can build a continuous relationship with each
customer e.g. Parents of newborn babies may receive periodic mailings
describing new clothes, toys & other goods as the child grows. For e.g.
Nestles baby food division continuously builds a database of new
mothers & sends personalized packages of gifts & advice at the key
stages in the baby's life.
8. Direct marketing strategies can be timed to reach prospects at the
right time & moments & therefore it receives a higher readership because
it is sent to more interested prospects.
9. Direct marketing also makes the direct marketers’ offer & strategy
less visible to competitors.
10. Direct Marketers can measure the responses to their campaigns to
decide which of them have been more profitable.
11. Tracking performance allows direct marketing to analyze
relationship between customer characteristics & buyer behavior in their
database
12. DM activities have an advantage over general marketing activities
in the area of performance tracking. Campaigns can be monitored to
determine if they are successful, knowing precisely what worked & what
did not. This allows selling goods effectively and leads to a more
efficient allocation of resources.
13. DM attempts to elicit response. In the process, the communication
performs both, advertising & selling function without an intermediary
14. Because no intermediaries are needed, they reduce the intermediary

mark ups & increase profits

15. Precision Targeting – Direct marketing activities are aimed at

individuals. This reduces the waste inherent in many other types of
communications.
16. The prospect is encouraged to place an order or trust information
more as he is calling a number or sending a card
Direct marketing is attractive to many marketers, because in many cases its

positive effect (but not negative results) can be measured directly. For
example, if a marketer sends out one million solicitations by mail, and ten
thousand customers can be tracked as having responded to the promotion,
the marketer can say with some confidence that the campaign led directly to
the responses. The number of recipients who are offended by the junk
mail/spam, however, is not easily measured. By contrast, measurement of
other media must often be indirect, since there is no direct response from a
consumer. Measurement of results, a fundamental element in successful
direct marketing, is explored in greater detail elsewhere in this article. Yet
since the start of the Internet-age the challenges of Chief Marketing
Executives (CMOs) are tracking direct marketing responses and measuring
results
Direct marketing is a huge business in India. A large percentage of that is

generated by direct mail--a one-to-one personal relationship between seller
and buyer. The advantages are clear:
* Direct mail can be focused, largely because of the ease, affordability and
availability of list services.
* Direct mail sales can be predicted with relative accuracy.
* Direct mail allows sellers to take the product/service directly to potential

buyers.

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 doesn't 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 you've 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 you've contacted in the first place. Once you've run a
direct marketing campaign and know the conversion rates involved, you can
work on refining and improving your success rates. Plus it also makes it
easier to plan, forecast and budget for future direct marketing campaigns.
Rapid Delivery:
Direct marketing is both swift and flexible in achieving results. This is
especially true for telemarketing, one of the direct marketing tools, as the
results of a conversation can be logged immediately and scripts adjusted
straight away to improve results.

Testing Capability:
Direct marketing allows you to test, test and test again in order to hit upon
the most successful combination of direct marketing tools. Any of these
variables such as timing, list, message, mailer and offer can be adjusted,
tested again, and measured to find the optimum direct marketing
proposition.
Relationship Building:
Direct marketing is far more effective at initiating and developing a
meaningful dialogue with new customers. From the outset you have a direct
relationship with them, which can also be used as part of a push pull strategy
to stimulate demand for retailers.
Targeting of Messages:
Direct marketing can enable you to target different messages to different
recipients. Using technology such as digital printing, it's even possible to
display different images, designs and offers in a direct mailer according to
who it's being sent to, as well as personalising the mailer to the recipient to
increase conversion rates.
Geographic Targeting:
Direct marketing can be used for any level of geographic targeting, whether
it's 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 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 sales method by which advertisers approach potential

customers directly with products or services. The most common forms of
direct marketing are telephone sales, solicited or unsolicited emails,
catalogs, leaflets, brochures and coupons. Successful direct marketing also
involves compiling and maintaining a large database of personal information
about potential customers and clients. These databases are often sold or
shared with other direct marketing companies.

For many companies or service providers with a specific market, the

traditional forms of advertising (radio, newspapers, television, etc.) may not
be the best use of their promotional budgets. For example, a company which
sells a hair loss prevention product would have to find a radio station whose
format appealed to older male listeners who might be experiencing this
problem. There would be no guarantee that this group would be listening to
that particular station at the exact time the company's ads were broadcast.
Money spent on a radio spot (or television commercial or newspaper ad)
may or may not reach the type of consumer who would be interested in a
hair restoring product.
This is where direct marketing becomes very appealing. Instead of investing

in a scattershot means of advertising, companies with a specific type of
potential customer can send out literature directly to a list of pre-screened
individuals. Direct marketing firms may also keep email addresses of those
who match a certain age group or income level or special interest.
Manufacturers of a new dog shampoo might benefit from having the phone
numbers and mailing addresses of pet store owners or dog show participants.
Direct marketing works best when the recipients accept the fact that their
personal information might be used for this purpose. Some customers prefer
to receive targeted catalogs which offer more variety than a general mailing.
Direct mail is among the cheapest ways to attract a new customer
A 2001 survey by The Pitney Bowes and Peppers and Rogers Group showed
it's a an effective marketing tool. 34% of those surveyed said that direct mail
is the most valuable method companies use to establish and further customer
relationships, the highest rated marketing method in the survey. Respondents
to the survey also felt that Direct Mail is effective at building customer
relationships because it is familiar (95%), convenient (94%), interactive
(93%), universal (93%), private (87%) and personalized (84%). The survey
also found that, now more than ever, consumers value organizations that
make an effort to communicate and build a relationship with them through
the mail.

The survey discovered that Direct Mail:
• Inspires action -- Forty-five percent of the respondents said that if

they received a targeted direct mailing they would mention the
company to their friends, call if more information was needed (44%),
open a second piece of mail sent by the company (43%), further
investigate the company on the Internet (39%) and buy something
being advertised (22%).
• Has a purpose -- Consumers said direct mail educates, organizes and
relaxes them.
• Has positive attributes - Eighty two percent of the recipients enjoy the
control in choosing when to open a mail piece, 78% appreciate its
non-intrusive nature, 65% feel positive about its security, and 56%
feel more involved with an organization that stays in touch using the
mail.
What's the advantage? With direct mail, you communicate one-on-one

with your target audience. You control who receives your message, what the
message communicates, when it's delivered, and how many people you
reach
It's cheaper to retain your current customers than gain new ones. And
repeat customers spend more. According to global management consulting
firm Bain and Co., a 5 percent increase in retention yields profit increases of
25% to 100%. And on average, repeat customers spend 67% more than new
customers.
Use a newsletter as a marketing piece to mail to prospective clients. Your

newsletter will contain information on your business and what you offer.
Ensure repeat business by staying in touch with your customers. Show them
you care on a personal level and drive this belief home with a newsletter.
Create excitement and inform your customers about your new services and
products. Let them know that you are an expert in your field.

CHAPTER: 10
LIMITATIONS OF
DIRECT MARKETING

LIMITATIONS OF DIRECT MARKETING
(A) Acquisition of data of individual customers may be difficult –

Direct marketing is effective only when all information about the
individual customer is available. It may be difficult to acquire this data,
as people would be reluctant to part with personal information.
(B) The customers could be exposed to information overload – In
today’s rich business and personal environment everyone is bombarded
with all types of data. Daily people receive letters, voice mails,
catalogues etc. Welcome and unwelcome information accosts the senses
through the radio, television, telephone, books etc. Direct marketers are
perceived to be contributing to this overload.
(C) Requires highly skilled staff to analyze each customer profile
– In Direct marketing communications, individual customers should be
addressed by name & title. Also information from database is used to
produce specific appeal based on consumers personal characters &/or
past purchase behavior. It is therefore important that the profile of each
individual customer is accurately maintained. This would be possible
only if the staff employed is highly competent to carry out this
accurately.
(D) Customer Service rather than customer loyalty is more
important in direct marketing
Direct marketing does have some negative aspects, however. Many people
are unaware of how the personal information they include on an order form
or survey may be used for targeted advertising later. One prevailing
philosophy in direct mailing circles is the idea that if a customer orders a
swimsuit from a clothing catalog, he or she might naturally be interested in
swimming pool supplies or exercise equipment as well. This could lead to
direct marketing overload, as potential customers and clients become
overwhelmed with catalogs, unsolicited emails and unwanted phone calls.

There is also the concern that personal information collected by legitimate

direct marketing agencies could be purchased by unscrupulous or shady
companies for the express purpose of fraud.
Many direct marketing companies belong to self-policing associations which

actively discourage fraudulent or invasive use of their databases. Legitimate
direct marketing firms should also offer methods by which individuals can
'opt out' of these lists by request. Direct marketing agencies must respect the
do-not-call list maintained by government agencies such as the Federal
Trade Commission (FTC). Customers also have the right to unsubscribe to
unsolicited catalogs and to block bulk emails from their in-boxes. Direct
marketing can be a very cost-effective sales tool for specialized companies,
as long as it is used properly and sparingly.
While many marketers like this form of marketing, some direct marketing
efforts using particular media have been criticized for generating unwanted
solicitations. For example, direct mail that is irrelevant to the recipient is
considered junk mail, and unwanted email messages are considered spam.
Some consumers are demanding an end to direct marketing for privacy and
environmental reasons which direct marketers are able to provide by using
"opt out" lists, variable printing and more targeted mailing lists.

CHAPTER: 11
Channels of Direct
Marketing

Channels of Direct Marketing
Direct Marketing is the used of consumer direct channel to reach and deliver
goods and services to customer without using marketing middlemen. These
channels include direct mail, catalogs, telemarketing, interactive T.V.,
kiosks, web sites and mobile devices. Direct Marketing is one of the fastest
growing avenues for serving customers.
Direct marketers seek a measurable response, typically a customer order.

This is sometimes called Direct Order Marketing. Today many direct
marketers use direct marketing to build a long term relationship with the
customer. Sales produced through traditional direct marketing channels have
been growing rapidly. Electronic marketing is showing even more explosive
growth the extra ordinary growth of direct marketing is a result of many
factors. Market de-massification has resulted in an ever increasing number
of market niches. Higher cost of driving, traffic congestion, parking
headaches, lack of time, a shortage of retails sales help, and lines at checkout
counters all encourage-home shopping.
Prospect Consumer / Customers: When targeting the prospect consumers or customers

every direct marketer must target the social and egoistic need. The social need is the third
in the Maslow’s Hierarchy pyramid. The social need includes such needs as love,
affection, belonging and acceptance. People seek warm and satisfying human relationship
with other people. Because of the importance of social motives in our society advertisers
of many product categories (like us) emphasize this appeal in their advertisement.
Egoistic need can take either an inward or an outward orientation or both. Inwardly
directed ego needs reflect an individual’s need for self acceptance, self esteem, success
and independence. Outwardly directed ego needs include the need for prestige, reputation
status and recognition from others. The presumed desire to ‘show off ’ one’s success and
achievement through material possessions is a reflection of an outwardly oriented ego
need.
We are targeting the egoistic need (outward orientation) of Maslow’s Hierarchy of motives
because people desire to show off one’s success and achievement through material
possessions.

Some direct marketers also use media such as door hangers, package inserts, magazines,
newspapers, radio, television, email, internet banner ads, pay-per-click ads, billboards,
transit ads. And according to Ad Age, "In 2005, Indian agencies generated more revenue
from marketing services (which include direct marketing) than from traditional advertising
and media
Direct mail:
The most common form of direct marketing is direct mail, sometimes

called junk mail, used by advertisers who send paper mail to all
postal customers in an area or to all customers on a list.
Any medium that can be used to deliver a communication to a customer can

be employed in direct marketing. Probably the most commonly used
medium for direct marketing is mail, in which marketing communications
are sent to customers using the postal service. The term direct mail is used
in the direct marketing industry to refer to communication deliveries by the
Post Office, which may also be referred to as "junk mail" or "admail" and
may involve bulk mail.
Junk mail includes advertising circulars, catalogs, free trial CDs, pre-
approved credit card applications, and other unsolicited merchandising
invitations delivered by mail or to homes and businesses, or delivered to
consumers' mailboxes by delivery services other than the Post Office. Bulk
mailings are a particularly popular method of promotion for businesses
operating in the financial services, home computer, and travel and tourism
industries.
In many developed countries, direct mail represents such a significant

amount of the total volume of mail that special rate classes have been
established. In the United States and United Kingdom, for example, there are
bulk mail rates that enable marketers to send mail at rates that are
substantially lower than regular first-class rates. In order to qualify for these
rates, marketers must format and sort the mail in particular ways - which
reduces the handling (and therefore costs) required by the postal service.
Advertisers often refine direct mail practices into targeted mailing, in

which mail is sent out following database analysis to select recipients
considered most likely to respond positively. For example a person who has
demonstrated an interest in golf may receive direct mail for golf related
products or perhaps for goods and services that are appropriate for golfers.

This use of database analysis is a type of database marketing. The United

States Postal Service calls this form of mail "advertising mail" (admail for
short).
Telemarketing:
The second most common form of direct marketing is telemarketing, in

which marketers contact consumers by phone. The unpopularity
of cold call telemarketing (in which the consumer does not expect
or invite the sales call) has led some US states and the US federal
government to create "no-call lists" and legislation including
heavy fines. This process may be outsourced to specialist call
centers.
In the US, a national do-not-call list went into effect on October 1, 2003.
Under the law, it is illegal for telemarketers to call anyone who has
registered themselves on the list. After the list had operated for one year,
over 62 million people had signed up. The telemarketing industry opposed
the creation of the list, but most telemarketers have complied with the law
and refrained from calling people who are on the list.In India too similar
kind of list has come into effect recently.
Canada has passed legislation to create a similar Do Not Call List. In other
countries it is voluntary, such as the New Zealand Name Removal Service.
Email Marketing:
Email Marketing may have passed telemarketing in frequency at this point

and is a third type of direct marketing. A major concern is spam,
which actually predates legitimate email marketing. As a result of the
proliferation of mass spamming, ISPs and email service providers
have developed increasingly effective E-Mail Filtering programs.
These filters can interfere with the delivery of email marketing
campaigns, even if the person has subscribed to receive them, as
legitimate email marketing can possess the same hallmarks as spam.

Broadcast faxing :
A fourth type of direct marketing, broadcast faxing, is now less common

than the other forms. This is partly due to laws in the United States
and elsewhere which make it illegal.
Voicemail Marketing :
A fifth type of direct marketing has emerged out of the market prevalence of
personal voice mailboxes, and business voicemail systems. Due to the
ubiquity of email marketing, and the expense of direct mail and
telemarketing, voicemail marketing presented a cost effective means
by which to reach people with the warmth of a human voice.
Abuse of consumer marketing applications of voicemail marketing resulted

in an abundance of "voice-spam", and prompted many jurisdictions to pass
laws regulating consumer voicemail marketing.
More recently, businesses have utilized guided voicemail (a application

where pre-recorded voicemails are guided by live callers) to accomplish
personalized business-to-business marketing formerly reserved for
telemarketing. Because guided voicemail is used to contact only businesses,
it is exempt from Do Not Call regulations in place for other forms of
voicemail marketing.
Couponing :
Couponing is used in print media to elicit a response from the reader. An

example is a coupon which the reader cuts out and presents to a super-
store check-out counter to avail of a discount. Coupons in newspapers
and magazines cannot be considered direct marketing, since the
marketer incurs the cost of supporting a third-party medium (the
newspaper or magazine); direct marketing aims to circumvent that
balance, paring the costs down to solely delivering their unsolicited
sales message to the consumer, without supporting the newspaper that
the consumer seeks and welcomes.
Direct response television marketing :
A related form of marketing is infomercials. They are typically called direct

response marketing rather than direct marketing because they try to

achieve a direct response via broadcast on a third party's medium, but

viewers respond directly via telephone or internet.
TV-response marketing--i.e. infomercials--can be considered a form of

direct marketing, since responses are in the form of calls to telephone
numbers given on-air. This both allows marketers to reasonably conclude
that the calls are due to a particular campaign, and allows the marketers to
obtain customers' phone numbers as targets for telemarketing. Under the
Federal Do-Not-Call List rules in the US, if the caller buys anything, the
marketer would be exempt from Do-Not-Call List restrictions for a period of
time due to having a prior business relationship with the caller. Major
players are firms like QVC, Thane Direct, and Interwood Marketing Group
then cross-sell, and up-sell to these respondents.
Direct selling :
Direct selling is the sale of products by face-to-face contact with the

customer, either by having salespeople approach potential customers
in person, through indirect means such as Tupperware parties.
Integrated Campaigns :
For many marketers, a comprehensive direct marketing campaign employs a

mix of channels. It is not unusual for a large campaign to combine
direct mail, telemarketing, radio and broadcast TV, as well as online
channels such as email, search marketing, social networking and
video. In a report conducted by the Direct Marketing Association, it
was found that 57% of the campaigns studied were employing
integrated strategies. Of those, almost half (47%) launched with a
direct mail campaign, typically followed by e-mail and then
telemarketing.

Direct marketers can use a number of channels for reaching individual

prospects and customers. These include face-to-face selling, direct mail,
catalog marketing, telemarketing, TV and other direct-response media, kiosk
marketing, and e-marketing.
1. Face-To-Face Selling
The original and oldest form of direct marketing is the field sales call e.g.
Eureka Forbes, Real Value - Ceasefire. Today most industrial companies
rely heavily on a professional sales force to locate prospects, develop them
into customers, and grow the business; or they hire manufacturers'
representatives and agents to carry out the direct-selling task addition, many
consumer companies use a direct-selling force: insurance agents,
stockbrokers, and distributors working for direct-sales organizations such as,
Oriflame, Avon etc.
2. Group Selling
A. Exhibitions and Trade Shows
Exhibitions are a hybrid medium. Some exhibitions are like broadcast

media advertising. The aim is merely to put products on show to a large
number of customers and excite their interest. Many national consumer
exhibitions are of this kind. There may be a direct marketing component.
You can ask consumers showing interest to give their name and address
to stand staff. These can then be distributed to local dealers for follow-up,
or customers may receive a mail-shot to sustain their interest and trigger
a visit to an outlet where they can buy.
Exhibitions must be used when:

 Sales calls are expensive and you want to get many customers visiting
you rather than you visiting them;

 You want to attract new customers and the exhibition has proven
quality attendance. In this respect, the exhibition functions like a rented

list;

 Complex concepts are being demonstrated, so instead of individual

demonstrations having to be mounted all over the country, many
customers can see the demonstration in one location.
e.g. Opel, Honda, Tata, Consumer Durables
B. Sales seminars and other company-sponsored special events
These include the following:

o The straightforward sales seminar, where a concept is described
and perhaps audio-visual techniques are used to demonstrate it in
action;
o The physical demonstration of the product, often held in your
sales office or at the factory;
o Awareness and training events, where your aim is to educate
customers so that they can appreciate the value of your company
offering. This is the 'soft sell' approach;
o Entertainment, e.g. visits to sporting and cultural events. Here
your aim is to reward your customer for loyalty and to further cement
the relationship.
All these have much in common with exhibitions from a direct marketing
view point. The difference is that, being sponsored by you, all those
attending must be invited by you or your business partners (very common in
business-to-business marketing). To ensure the right quality of attendee,
direct marketing is the medium most commonly used to market such events.
E.g. British Airways, Time–share Club selling.
3.Direct Mail
Direct-mail marketing involves sending an offer, announcement, reminder,

or other item to a person. Using highly selective mailing lists, direct mar-
keters send out millions of mail pieces each year—letters, flyers, foldouts.
Direct mail can be used effectively in both acquisition & retention. Direct
mail personalization is very common. Today, nearly every mailing to a-
firm's prospects and customers has the name of the target person, along with
his or her address. The days when direct marketers sent mailings with
envelopes addressed "To the resident" are nearly gone. This personalization

is possible because of computing power & massive database that contain

names & addresses. Sophisticated computer programs mass-produce
personalized mails by feeding names & addresses onto letters and other
pages such as those in magazines. This creates the illusion of a personal
contact between the seller and a target market e.g. ICICI, HDFC, Citibank,
Reader’s Digest
Direct mail is flexible because of its ability to customize a message based on

the audience it is appealing to and the circumstances under which that appeal
is being made. As a medium, the mails have no fixed audience parameters.
Unlike other media, such as television, radio, magazines, and newspapers,
direct mail is not constrained in how it defines the scope and location of its
target audience. Thus, the mailer, not the medium, determines the nature and
size of any direct-mail effort.
Thus, the advantages of direct mail are as follows:
 Selectivity
 Personalization
 Flexibility
 Isolation
 Response rates
4. Direct- Response Television Commercials
Today's revolution in direct marketing is most evident in the way direct-

response commercials look, implying that the audiences react mainly to the
creative approach of what they see. However, like any other form of
advertising, direct-response commercials seek to communicate with
members or target markets - benefits are described, a set of supporting
reasons for why the product delivers those benefits is explained These
reasons establish the credibility of the product and the offer and may be
linked to attributes of the product such as how it works or how it is made or
designed. Credibility is often derived from demonstrations and testimonials.
Direct-response advertisements are designed to provoke a specific action
from the prospects. The object may to be the viewer to place an order by
calling a number or, less frequently, to write for more information, Direct-
response television offers produce 60-to-80 percent of the-orders via toll-
free phone, with the rest coming in by mail. Toll-free numbers connect the

caller with phone centers that handle incoming calls they generally operate
seven days a week and are staffed to handle the anticipated phone volume.
e.g. Asian Sky shop, TSN.
5. Direct Response In Print Media.
Magazines and newspapers convey messages on printed pages to mass

audiences or highly segmented audiences, depending on which specific
publication is selected. Direct marketers benefit from prints in the following
ways
• Longer shelf life compared to direct mail
• Pass-along readership potential
• Regional and demographic segmentation
• Print also allows direct marketers to widen their customers base to non-
mail order buyers.
Making magazine and newspapers advertising work. Direct-response
magazine and newspapers space advertising must ask the reader to do
something. To make a sale, the advertisement must present enough
information to stimulate a purchase decision or generate an inquiry, which
will be followed up by mail or a personal sales call. e.g. Asian Paints, Berger
Paints, McDonalds, Dominos, Outlook, The Week. There are two broad
objectives while preparing a direct marketing strategy:
• Acquisition - In media planning, for customer acquisition, the need is to
locate, identify, & directly contact potential customers in the target
market. The core aim of such campaigns is to recruit maximum number
of target customers at the minimum cost.
• Retention - In retention, the relationship with the customer deepens &
the organization can begin to record data on preferences & habits. At
this stage the choice of communication media can be customer defined.
Improving cost efficiency & effectiveness in interaction with the customer is
important. Reduce the customer paper cycle & treat more valuable
customers differently by contacting them directly through telemarketing.
6. Catalogs

The word catalog has been derived from the Greek word 'Katalogos',
meaning 'to list' the use of the word list may seem simple, but even today
catalogs are most often both visual and verbal listings of products for sale.
Products are pictured with informational copy designed and worded to entice
the reader to buy. Sophistication of design, photographs, art, ink, and glossy
paper have transformed the original unadorned 'list" into one that is fully
customized and ready to entertain, educate, and sell with the flip of a page.
Types of catalogs
Catalogs are first classified according to whether they are for consumers or
business organizations Consumer catalogs have mass circulations, while
business catalogs have much lower circulations. Consumer catalogs are
distinguishable by the types of items they carry, the target markets they want
to reach, and the quality of their appearance and design. While some
consumer
catalogs are designed to generate retail store traffic, the majorities are from
firms that concentrate almost exclusively on catalog sales.. e.g. Tour
operators, Titan, Tanishq
Business-to-Business catalogs sell such items as office supplies and

computer accessories. They usually carry specific types of items such as
paper products or electronics as opposed to a general selection. The catalogs
are mailed often to a select list of prospects or to those buyers who have
placed an order during a fixed period of time. e.g. Omega Stationery,
Anupam Stationary, Kores, Siemens.
7. E-mail and the Internet
The Internet provides marketers with the ability to interact with people far
more. Its main benefits to the direct marketer include the complementary use
besides other more classic direct marketing methods to supply further
information. It also provides a platform for information on benefits and
services for any new potential prospects and a means to apply online or
request more information, ask questions or register online. It can be
refreshed regularly and cheaply, which can be far more efficient than
updating a catalogue. Banner ads can be placed on complementary sites to
attract your chosen target audience to your site to increase response to

tactical offers, as well as e-mail marketing to raise awareness of your

campaigns and offers.e.g. Amazon.com, Bazee.com, Rediff , Yahoo.
8. Telemarketing and m-commerce
Telemarketing involves the use of the telephone and calls centers to attract
prospects, sell to existing customers, and provide service by taking orders
and answering questions. Telemarketing helps companies increase revenue,
reduce selling costs, and improve customer satisfaction.
Telemarketing can be an important part of an integrated marketing

communication program. The telemarketing objective is to reach customers
in a personalized, cost- effective interaction that meets customer needs. The
scope of telemarketing is limited only by the imagination of the direct
marketer. Although no other marketing tool can match the cost-
effectiveness, flexibility, control, and speed of the telephone, it takes more
than just good telephones to get good results. A telemarketing firm must
have qualified telephone operators who have been well trained in the use of
the telephone as a marketing tool. This includes training in proper voice
inflections, listening skills, persistence, and patience. Companies use call
centers for inbound telemarketing (receiving calls from customers) and
outbound telemarketing (initiating calls to prospects and customers). e.g.
ICICI, Citibank, HSBC, Orange, Airtel
In fact, companies carry out the following types of telemarketing:

• Selling, including outgoing and incoming callings
• Setting qualified appointments.
• Generating lead advertisements
• Surveying.
• Providing customer service.
• Advertising (Public Relations)
• Pursuing collections.
9. Inserts

Many publications offer to place flyers, inserts for direct marketers. Some
readers find it irritating but many respond well as they are the first thing in
the journal that they see & thus have an effective impact. Most inserts
outperform sales advertisements but they tend to be three to six times more
expensive depending on the quality of production. For a direct marketer it
means that your message is isolated from the run of the journal & has the
opportunity to stand out more effectively prepaid reply cards & free phone
response numbers make it easy to for people to respond e.g. Computer
Institutes
10.Videotext and interactive TV
Here the consumer's TV set is linked with a seller's catalog by cable or

telephone lines Consumers can place orders via a special keyboard device
connected to the system Much research is now going on to combine TV,
telephones, and computers into interactive TV
11.Short messaging service (SMS)
SMS is the written text service, which is sent from mobile to mobile and
also, though less widely used, from PC to mobile and from digital TV set-
top box to mobile. This is often called 'message to mobile'. As this channel
is fairly new, it has the benefit of increased cut-through and impact on its
audience who may still be receiving marketing through SMS for the first
time. With SMS comes the promise of personal and local marketing that is
both interactive and immediate. However, because this is an incredibly
personal channel, care should be taken to ensure the message is targeted to
the right person, at the right time, with the right offer, or else the message
can be lost and damage done. Results have shown that the more interaction
you have with the receiver, and the more value you add, the better the
response.
SMS communication should never be used as a stand-alone campaign. The

media space is simply not robust enough to communicate on its own.
However, the combined impact of brand activity and a strong timely offer
through SMS can have a big impact. Mobile will enhance but not replace
traditional marketing functions.

Teleshoping / home shopping:
Teleshoping, alternatively known as home shopping, is one of the relatively

more recent editions of the direct marketing. Here, the marketers hawks the
products in the air and the consumers watches it on his television screen at
home phones up the marketer and buys his requirement.
• Benefits all the groups in the game..
Benefits the customer. World over shrinking leisure time on the part of the
consumers has contributed to the growth of teleshopping. This now
becoming true of the Indian Consumers too. Especially the Urban middle
class consumers. In addition to the convenience of shopping the customer is
also belter off with teleshopping in the form of lower prices and gift offers
etc. Teleshopping network sell their words on the slogan ; “ The products
you see on your screen are just a phone call away, you get some discount as
well “.
Benefit the manufacturer. Manufacturers are happy with the idea, as it

promotes their sales and reduces their costs. To them, teleshopping serves as
a good supplement or substitute, as the case may be , for conventional
marketing through various marketing channels. It provides them a direct link
to the consumer. they also save the margins, as they by pass the channels.
They can use these savings for remunerating the telle shoping network and
for offering discounts to the customer and build up sales. Infact one major
characteristic of teleshopping is that it is a low cost retailing system.
More over teleshopping, with its highly targeted marketing enables the
manufacturers to cut their advertising as well. Actually it gives them the
twin benefit of lower cost and higher effectiveness of communication as it
catches the target viewers better compared to conventional advertising
methods. surveys indicate that the recall level is quite high in teleshopping .
it is a particularly good medium for concept selling ad for selling new
products as it permits full demonstration.

Benefit the marketer / teleshopping network : To the marketer i.e. the

teleshopping network, it means a novel business activity that brings
sustained revenue. A teleshopping network corresponds to the marketing
channel in conventional marketing. Its usually gets a good distribution
margin. And it usually manage the curtailing at a lower unit cost compare to
conventional marketing. In teleshopping the only significant term of
expenditure is the telecasting cost. So network saves a considerable amount
out of the margin. It is also able to retain for itself a large portion of the
margin.
Benefits the TV channel: finally, teleshopping benefits the TV channels as

well. For TV channels ,teleshopping is anew source of revenue. Doordarshan
for example allowed channeling for teleshopping by All’s network on a
profit sharing basis. DD gained a share from every item sold by the network.
TV channels, after all depend on commercial for their income. They
naturally see teleshopping as an attractive source of income as it is totally
commercial.
Teleshopping in India:
Teleshopping ahs been gaining ground in India in a steady manner in recent

years. A variety of favorable factors have made it possible. In the first place,
the relevant technologies have become available. Secondly, India is now
more open to such marketing methods. Thirdly, TV chanels have multiplied
enormously and TV as a medium has matured in the country, telecome
infrastructure too has grown to some extent.
The changing socio-economic profile of the urban, upper- middle

class consumer in India has also been a contributing factor . this segement
has been showing interest in such alternatives to traditional method of
shopping. It prefers to avoid the hassels of shopping in stores. Awareness
about product has also been growing among this class of consumers. So is
impulse buying.

CHAPTER: 12
CUSTOMER
RELATIONSHIP
MANAGEMENT

CUSTOMER RELATIONSHIP MANAGEMENT
Targeting, acquiring, and retaining the "right" customers is at the core

of many successful service firms Here, we emphasize the importance of
carefully choosing target segments and taking pains to build and maintain
their loyalty through well-conceived relationship marketing strategies.
Underlying this strategy is the notion of market segmentation. More and
more firms are trying to decide which types of customers they can serve well
rather than trying to be all things to all people. Once a firm has won
customers it sees as desirable, the challenge shifts to building relationships
and turning them into loyal customers who will generate a growing revenue
stream for the firm in the future.
Building relationships is a challenge, especially when a firm has

many, often millions, of customers who interact with the firm in many ways
(from e-mail to call centers to face-to-face interactions). When implemented
well, customer relationship management (CRM) systems provide managers
with the tools to understand their customers and tailor their service, cross-
selling, and retention efforts, often on a one-on-one basis.
Loyalty has been used in a business context to describe a customer's

willingness to continue patronizing a firm over the long term, purchasing
and using its goods and services on a repeated and preferably exclusive
basis, and recommending the firm's products to friends and associates.
However, brand loyalty extends beyond behavior to include preference, lik-
ing, and future intentions..

CHAPTER: 13
IMPORTANCE OF
CUSTOMER LOYALTY

IMPORTANCE OF CUSTOMER LOYALTY
Why Is Customer Loyalty Important to a Firm’s Profitability?

How much is a loyal customer worth in terms of profits? In a classic study,
researchers have analyzed the profit per customer in various service
businesses, categorized by the number of years that a customer had been
with the firm. The researchers found that the longer customers remained
with a firm in each of these industries, the profitable they became to serve.
Similar loyalty effects were also uncovered in the Internet context, where it
typically took more than a year to recoup acquisition costs and profits
increased as customers stayed longer with the firm.
There are four factors working to the supplier's advantage to create

incremental profits. In order of magnitude, these factors are
1. Profit derived from increased purchases.
Over time, business customers often grow larger and so need to purchase
in greater quantities. Individuals may also purchase more as their families
grow or as they become more affluent. Both types of customers may
decide to consolidate their purchases with a single supplier that provides
high-quality service.
2. Profit from reduced operating costs.
As customers become more experienced, they make fewer demands on
the supplier (for instance, less need for information and assistance). They
may also make fewer mistakes in operational processes, thus contributing
to greater productivity.
3. Profit from referrals to other customers.
Positive word-of-mouth recommendations are like free sales and
advertising, saving the firm from having to invest as much money in
these activities.
4. Profit from price premium.
New customers often benefit from introductory promotional discounts,
whereas long-term customers are more likely to pay regular prices.

Moreover, when customers trust a supplier, they may be more willing to

pay higher prices.
CHAPTER: 14
MANAGING CUSTOMER
RELATIONS

MANAGING CUSTOMER RELATIONS
Targeting The Right Customers
Many elements are involved in creating long-term customer relationships

and loyalty. The process starts by identifying and targeting the right
customers Whom should we be serving, is a question that every business
needs to raise periodically Customers often differ widely in terms of needs
and the value they can contribute to a company Not all customers offer a
good fit with the organization's capabilities, delivery technologies, and
strategic direction
1. Good Relationships Start with a Good Fit
If they want to build successful customer relationships, companies
need to be selective about the segments they target. Matching
customers to the firm's capabilities is vital. Managers also need to
consider how well their product / service can meet the expectations of
different types of customers. Finally, managers need to ask
themselves whether their company can match or exceed competing
products / services that are directed at the same types of customers
The result of carefully targeting customers by matching the company's

capabilities and strengths with customer needs should be a superior
product / service offering in the eyes of those customers who value
what the firm has to offer “the result should be a win-win situation,
where profits are earned through the success and satisfaction of
customers, and not at their expense”.
2. Searching for Value, Not Just Numbers

Too many service firms still focus on the number of customers they
serve - an important issue for operations and human resource planning
- without giving sufficient attention to the value of each customer
Generally speaking, heavy users buy more frequently and in larger
volumes and are more profitable than are occasional users.

Relationship customers are by definition not buying commodity

services. Customers who buy based strictly on lowest price (a
minority in most markets) are not good targets for relationship
marketing in the first place. These deal-prone customers continually
seek the lowest price on offer
Acquiring the right customers can bring in long-term revenues,
continued growth from referrals, and enhanced satisfaction from
employees whose daily jobs are improved when they can deal with
appreciative customers. Attracting the wrong customers typically
results in costly churn, a diminished company reputation, and
disillusioned employees. Marketers also need to recognize that some
customers simply are not worth serving, because they are too difficult
to please or unable to decide on what they want.
3. Selecting an Appropriate Customer Portfolio

Artists and writers often prepare portfolios of their work to show to
prospective purchasers or employers. The term portfolio also
describes the collection of financial instruments held by an investor.
This concept of portfolio can be applied to businesses with an
established base of customers. Like investments, some types of
customers may be more profitable than others in the short term, but
others may have greater potential for long-term growth. Similarly, the
spending patterns of some customers may be stable over time,
whereas others may be more volatile – some customers tend to spend
heavily in festive times. A wise firm may seek a mix of such segments
in order to reduce the risks due to market or macroeconomic forces
Analyzing and Managing the Customer Base
Marketers should adopt a strategic approach to retaining, upgrading, and

even terminating customers. Customer retention involves developing
long-term, cost-effective links with customers for the mutual benefit of
both parties, but these efforts need not necessarily target all a firm's
customers with the same level of intensity. Recent research has
confirmed that most firms have several tiers of customers in terms of
profitability and that these tiers often have quite different expectations
and needs. According to Valerie Zeithami, Roland Rust, and Katharine

Lemon, it's critical that firms understand the needs of customers within
different profitability tiers and adjust their service levels accordingly.
Retaining, Upgrading, and Terminating Customers
Generally, customer tiers are based on not only profitability but also
other identifiable characteristics common among these different
segments. Instead of providing the same level of service to all customers,
each segment receives a customized service level, based on its
requirements and value to the firm. For example, the platinum tier will
receive some exclusive benefits not available to other segments. The
benefit levels for platinum and gold customers are often designed with
retention in mind, because these customers are the ones that competitors
would like to entice to switch.
Marketing efforts can be used to encourage an increased volume of

purchases, upgrading the type of service used, or cross-selling additional
services to any of the four tiers. However, these efforts have a different
thrust for each of the tiers, reflecting their differing needs, usage
behaviors, and spending patterns. Among segments for which the firm
already has a high share of wallet, the focus should be on nurturing,
defending, and retaining these customers, potentially via loyalty
programs.
Terminating customers comes as a logical consequence of the

realization that not all existing customer relationships are worth keeping.
Many relationships are no longer profitable for the firm, as they may cost
more to maintain than the revenues they generate. Some customers no
longer fit the firm's strategy, either because it has changed or because the
customers' behavior and needs have changed. Just as investors need to
dispose of poor investments and banks may have to write off bad loans,
each service needs to regularly evaluate its customer portfolio and
consider terminating unsuccessful relationships. Legal and ethical
considerations, of course, will determine whether it is proper to take such
actions.

CHAPTER: 15
BUILDING CUSTOMER
LOYALTY

BUILDING CUSTOMER LOYALTY
What makes customers loyal to a firm, and how can marketers increase their
loyalty? This can be divided into the following
1. The Foundations of Customer Loyalty
2. Creating Bonds with Customers
3. Managing and Curtailing Drivers of Customer Defections
1. The Foundations of Customer Loyalty

The foundation for true loyalty lies in customer satisfaction
a. A delighted happy customer

As Tom Peters calls it, 'a customer that goes 'wow' when they deal
with an organization.' This is the kind of customer that will come
back, will tell their friends about their experience and will become an
advocate for the business - an unpaid salesperson
b. A satisfied customer
On the other hand, a satisfied customer is somebody whose
expectation is actually equal to their experience. It is not any better
significantly, neither is it any worse- they are satisfied. However, this
does not seem to enter the customer's memory for any long period of
time
c. A dissatisfied customer
This may be frustration, annoyance or impatience. It is simply defined
where the experience of what you get as a customer is less than the
expectation. Many organizations are actually safe from extinction and
possible ruin because they have
such low expectations with in their customers that their experience,
whilst falling below many other standards, managed to escape
dissatisfaction
2. Creating Bonds with Customers

Having the right portfolio of customer segments, attracting the right

customers and delivering high levels of satisfaction are a solid foundation
for creating customer loyalty. However, there is more that firms can do to
"bond" more closely with their customers. At the same time, service
marketers should be working to identify and eliminate the factors that result
in "churn," or the loss of existing customers and the need to replace them
with new ones.
a. Deepening the Relationship

To tie customers more closely to the firm, deepening the relationship
via bundling and / or cross-selling is an effective strategy. For
example, banks like to sell as many financial products into an account
or household as possible. Once a family has its current account, credit
card, savings account, safe-deposit box, car loan, mortgage, and so on,
with the same bank, the relationship is so deep that switching becomes
a major exercise and is unlikely unless, of course, the customer is
extremely dissatisfied with the bank.
b. Reward-Based Bonds
Within any competitive product category, managers recognize that
few customers consistently buy only one brand, especially if service
delivery involves a discrete transaction (such as a car rental) rather
than being continuous, (as with insurance coverage). In many
instances, consumers are loyal to several brands while spurning others
—sometimes described as "polygamous loyalty" (not to be confused
with variety
seeking, which results in consumers flitting butterfly-like from brand

to brand, without any fixed allegiance at all). In such instances, the
main goal becomes one of strengthening the customer's preference for
one brand over others.
c. Social Bonds
Have you ever noticed how your favorite hairdresser addresses you by
name when you go for a haircut or asks why you haven't been in for a
long time and hopes everything went well when you were away on a
long business trip? Social bonds are typically based on personal

relationships between providers and customers. Alternatively, they

may reflect pride or satisfaction in holding membership in an
organization. Although social bonds are more difficult to build than
financial bonds and may require considerable time to achieve, they
are, for that same reason, also more difficult for other suppliers to
replicate for that same customer. A firm that has created social bonds
with its customers has a better chance of retaining them for the long
term.
d. Creation of Customer Bonds through Membership Relationships

and Loyalty Programs
As a marketing strategy, many businesses seek ways to develop
formal, ongoing "membership" relations with customers Hotels, for
instance, have developed "frequent-guest programs" offering priority
reservations, upgraded rooms, and other rewards for frequent guests
Many nonprofit organizations, such as museums, create membership
programs in order to reinforce the links with their most active
supporters, offering them such extra benefits as private showings and
meetings with curators or artists as a reward for annual donations The
marketing task here is to determine how to build sales and revenues
(or, in the case of nonprofits, donations) through such "memberships,"
while avoiding the risk of freezing out a large volume of desirable
casual business
3. Managing and Curtailing Drivers of Customer Defections

So far, we have discussed drivers of loyalty and strategies to tie
customers more closely to the firm An alternative approach is to
understand drivers of customer defections, or churn, and work on
eliminating or reducing those drivers For example, in the mobile phone
industry, players regularly conduct "churn diagnostics" the analysis of
data warehouse information on churned and declining customers, exit
interviews (call center staff often have a short set of questions they ask
when a customer cancels an account, to gain a better understanding of
why customers defect), and in-depth interviews of former customers by a
third-party research agency, which typically yield a more detailed under-
standing of churn drivers

Common Churn Drivers

Many surveys have been carried out over recent years to try to understand
why customers defect. While the answers may vary by customer and
organization, survey after survey highlights similar trends and reasons
(a) Price
While it may be important in attracting new customers, it would seem
that it is a minor issue in developing loyalty and retaining customers.
Most research in this area, though varying by industry and country, rarely
puts price at more than 15 per cent as the reason for switching suppliers
or business
(b) Physical factors

Such physical factors as a 'more convenient location' are also ranked
quite low, as are competition action and invention. Marketing and
competitor activity and a relationship with a competitor are about 15 per
cent. The competitor product's advantages can often account for the
further 10 to 15 per cent
Customer sophistication
Customers not only expect and demand more they are also articulate in
saying so. Twenty years of dramatic social change in housing, lifestyle,
education, travel, etc. have changed the way many of us select the
business we use.
(c) Complexity
Buying even the simplest product or service can, if the customer wishes,
be a very complex decision-making process. The blurring of differences
between brands, products and companies, the dynamic interaction
between a product and the level of service behind it, both during a sale
and afterwards, make it difficult to isolate buying motivations and criteria
(d) Competition
In almost every market in every developed country of the world,
competition has increased dramatically in the last ten years.
Globalization, advanced manufacturing technology and many other

factors has led to business becoming faster, having a higher quality,

being quicker to innovate and being more price-competitive etc
(e) Costs
Cost has significant role to play in understanding the economic trends
and changes of recent years. The economic downturn of the early nineties
gave both the business customer and personal consumer a sharp jab in the
ribs to remind them that markets can indeed go down as well as up. The
experience and the lingering memory of it has made us all more aware of
cost, the value of managing cost, and the importance of getting greater
value for money when purchasing and choosing suppliers
(f) Indifference
One of the most common and significant reasons for customer switching
and disloyalty is the indifference and inattention of the business - from
the customer's point of view, the lack of any reason to stay. Most surveys
highlight poor service as a more common reason for switching suppliers
than price advantage. This can also be supported by the general
observations of marketing specialists, who detect the following changes
in consumer and business purchasing behavior
If we look in more detail at what is meant by 'indifference', both through

the research statistics and our own experience, it becomes clear that there
are many critical aspects behind any customer defection, including
 Too little contact
 Too little individual attention
 Poor quality attention-especially problem are encountered
 Generally poor service levels and standards
In non-commercial organizations or utility providers, where changing

supplier or switching business is more difficult, these four factors are
often at the root of the majority of complaints.

CHAPTER: 16
Questionnaire when
conducting a direct
marketing exercise:

Questionnaire when conducting a direct marketing exercise:

It is important to ask yourself these questions:
-What's the product's benefit to the consumer?
-what need or desire does the product fill?
-whether you emphasized that benefit in the direct marketing clearly and in a
strong way?
-How is your product superior to that of your competitors?
-Is it higher quality?Less expensive? More convenient to buy or use?
-Is it one of a kind? And whether you stressed on those advantages or

conveniences in the direct marketing as reasons for consumers to come to
you instead of to a competitor?
-Does the product have a season or a window of opportunity in which the

most purchases are likely to occur? An example would be snow skis, boats
or lawnmowers. And whether you timed your direct marketing properly so
you didn't miss the season?
After having answered all the above questions, you must consider all the
information gained and then think about the ideas below for future direct
marketing campaigns:
Include a testimonial or indicate references from satisfied customers in the
direct marketing piece.Repeat the direct marketing exercise. You need to be
consistent in your advertising whatever form of media you use.

CHAPTER: 17
AMWAY-THE SUCCESS
STORY

Amway India, a wholly owned subsidiary of Amway Corporation, was

established in August 1995 after approval by India's Foreign Investment
Promotion Board (FIPB). Amway India commenced commercial operations
on May 5, 1998 and is now the largest Direct Selling FMCG Company. The
Company is headquartered at the National Capital Region of India - New
Delhi.
Amway has invested in excess of US $ 35 million (Rs. 151 crore) in India of

this; US $ 6 million (Rs. 26 crore) is in the form of direct foreign
investment. Amway India has 400 full time employees and has generated
indirect employment for 1,650 persons at all the contract manufacturer
locations.
Amway India provides free and unlimited training to all its distributors to
help them grow their business. Amway India conducted over 34,000 training
sessions during in the past 12-months with an attendance of over 1.5 million
Amway Business Owners and prospects.

Amway India is a member of the Indian Direct Selling Association (IDSA).

The IDSA is an industry regulatory body, with several reputed
international and Indian Direct Selling companies as members. A
Mumbai-based consumer rights activist, Asha Kidnani, is IDSA’s
Ombudsman & Code Administrator. Amway India is also a member of
the Confederation of Indian Industries (CII) and Federation of Indian
Chambers of Commerce (FICCI).
Sales Data
Known Sales Data
Year Wholesale Sales (IRP)
1999 0.99 million
2000 2,48 million
2001 5,53 million
2002 6,26 million
2003 5,79 million
2004 6,36 million
2005 6,33 million
2006 7,68 million

2007 7,99 million

2008 11,28 million
2009 14,07 million
IT pens Amway India’s direct marketing success story
Amway India is using state-of-the-art technologies to ensure that all business

information is available in real-time and all Amway offices and distributors
are connected anytime, all the time
Efficient information system is the heart of Amway operations. The

objective of all our IT initiatives is to ensure that we have a strong heart to
support other organs by providing real time information any time, any place
Amway’s long-term IT vision and the deployment of relevant information

technology systems to make communication real-time, has enabled it to
implement an effective business model
For Amway India the Rs 553 crore subsidiary of US-based $5 billion

Amway Corporation, Information Technology has played an integral part in
making it one of the biggest success stories in the direct marketing space in
the country. With 45 offices and 3.10 lakh active distributors (apart from
other distributors), and third-party contract manufacturers spread across the
country, contemplating operations without an effective automated system
was an unthinkable task for the company’s management.
The company’s state-of-the-art IT infrastructure has prompted Rajeev Arya,

director, information technology & business systems, Amway India
Enterprises, to call it a “mini technology company.” What makes the
company worthy of this title is not just its strategic IT vision, but also its
intrinsic technology strength. The fact that Amway has a 25-member IT

team, and that almost 60-70 percent of its total capital investment is directed
towards funding IT initiatives, is proof that IT is serious business at Amway.
IT Vision
Amway’s direct selling business model, warranted the need for in-house
expertise. In this, the company was fortunate enough to leverage the
technology expertise of its parent company. This gave the company a strong
foundation to build upon. Ever since it set up operations in 1988, Amway
has stressed on the importance of IT. The early hardware systems and IT
processes including the indigenously developed ERP system were part of the
package acquired from the parent company. With the initial systems in place
Amway went on to fortify it, with one vision in mind “Networked for the
21st century.”
According to Arya, the need for a robust IT system was imminent

considering the nature of Amway’s work processes. Under the direct-selling
model, the company has a chain of distributors, vertically as well as
horizontally, selling its products. Since one distributor cannot sell all the
products, he sponsors another who is below him on the chain. In Amway’s
distribution system, the chain can go as deep as possible. Furthermore, the
benefit of every sale happening down the line goes to each level of the top
line, on the basis of a certain formula. These sales have to be tracked on a
monthly basis as the points achieved have to be reimbursed by the month-
end itself, and cannot be carried over to the next month.
What makes the managing of such a system a

Herculean task is the sheer spread of the business
operations. With over three lakh active
distributors, the chain ripples as low as the 100th
and 1000th level in the system, furthermore the
person could be based anywhere in the country.
“There is a lot of complexity involved in tracking
the sales and accounts of each of the distributors at every level of the chain,

as the sum due at each level is calculated on the basis of volumes generated
by the distributor, as well as all his down lines,” explains Arya.
Amway’s long-term IT vision and the deployment of relevant information

technology systems to make communication real-time, has enabled it to
implement an effective business model. According to Arya, “Amway India
is using state-of-the-art technologies to ensure that all business information
is available in real-time and all Amway offices and distributors are
connected anytime, all the time.” This, in fact, is the mission statement
guiding the choice of IT systems (hardware and software), applications right
from ERP, Interactive Voice Response System (IVRS), SMS, disaster
recovery management and e-business, VoIP and the advanced
communication system.
Other systems
• Complaint Management System (CMS): CMS is another in-house

developed Lotus Domino-based package, integrated to the backend.
Once the complaint or request is logged, it is assigned to an
appropriate assignee. A mail notification with the details of the
complaint/request goes to the assignee. Arya says this is a three level
escalation process. After the call has been addressed, it goes into the
knowledge management database, which generates a report stating the
average resolution time taken per call. This system is aimed at
analysing performance with regard to customer service in terms of the
most frequent mistakes, time taken to resolve a complaint, and reasons
for delay. All this ultimately results in improved customer service
response, adds Arya.
• Interactive Voice Response System (IVRS): This round the clock
service provides complete business information such as product
information, new launches and promotions, addresses and contact
information and most importantly tracks Amway’s reward points
system. This service is available over the phone to any Amway
distributor in India. However, currently only the national capital
region can access it as a local call. But the overwhelming response
that the company has received, coupled with some regulatory
relaxations, has prompted it to soon extend the service to other
locations through a service provider. Amway is in talks with various
service providers for making IP voice calls.

• Short Messaging Service (SMS): Through this service, Amway India

is leveraging on SMS to provide critical information to its distributors
“any time, anywhere” on their mobile phones. Amway charges its
distributors a minimum amount each month for this service. The
business information messages are delivered to the distributors
automatically using the push technology. As a result, the top line is
always informed of the happenings down the line. In order to provide
the service, the company has tied up with CellNext as the application
service provider. Elaborating on how the backend works, Arya
explains that CellNext has tied up with most of the cellular service
providers, which enables it to deliver the service to almost all of
Amway’s distributors. The software package for this system has been
developed in-house.
• Disaster Recovery Management: With so much dependence on
technology for efficient day-to-day operations, disaster recovery
forms an imminent part of the company’s IT systems. Currently, all
locations connect to the central site at Delhi. In order to deal with the
eventuality of any disaster, the company has developed a disaster
recovery system. A complete copy of its current production set-up has
been housed at its disaster recovery location at Mumbai.
A well-defined standard operating procedure has been put in place to deal

with a disaster. These processes are audited and validated from time-to-time.
Every quarter, there is a simulation of the disaster and its results are
documented. This exercise is also aimed at identifying areas of
improvement. The aim of disaster recovery management system is, as Arya
puts it, to restore normal business operations within 48 hours of a disaster
striking the central site at Delhi.
Heading towards e-business
According to Arya, Amway India has a three-phase approach for foraying

into e-commerce. As part of the first phase, it launched its website in
January 2001. With that, Amway became the first direct selling company in
India to have its own site. The second phase saw the launch of interactive
website a year later, which enabled the distributors to check their business
volume and download various business information. The company is
currently working on the third phase, with which it plans to commence its e-

business operations. The third phase will allow the distributors to conduct
their business online.
Taking consideration of the increased security requirements with the

introduction of e-commerce, Amway’s servers will be in militarised zone,
whereby nobody will be able to talk to the iSeries directly. To avoid
hacking, only the proxy server will talk to the iSeries server. The
implementation of third phase is estimated to be completed by end of 2002
or early 2003.
The company is currently deliberating upon using IBM’s Web commerce

suite or opting for an in-house software package. Amway wants to leverage
the Internet as an additional channel for its distributors, as well as to create
synergies in its operations.
• Communication Systems: The communication system forms the

digital nervous system of the company, as it provides connectivity to
all 49 Amway offices and warehouses across the country. It enables
users to connect to the iSeries and other services for their day-to-day
operations. All locations are connected with the head office through
Amway’s wide area network (WAN) based on VSATs, leased lines
and VPN having an uptime of 99 percent. “With the kind of
communication requirements that the company has, it is very critical
to have dependable and cost-optimised links. Taking the orders and
billing invoices is on a day-to-day basis and we cannot afford any
downtime.”
The company has evolved a very intelligent communication and networking

strategy, which enables both efficiency and cost optimisation. Amway India
has established leased line as the primary link, which offers 64 Kbps of
bandwidth. VSATs, on the other hand, have been established as the
secondary link. As a result, the secondary link takes over if the primary link
is down through the implementation of cross-over switch.
On the VSATs front, Amway has judiciously partnered with HCL Comnet
and Hughes Escorts Communications. According to Arya, the challenge here
lies in managing the large number of communication links and the huge
number of users (over 1000), which makes management of the infrastructure
a complex task. The company has also got a couple of Virtual Private
Networks in place, as they provide for a thicker channel for connectivity.

• Voice over Internet Protocol (VIP): Amway leverages its existing

leased line infrastructure to allow users to make toll free long distance
telephone calls between Amway offices. At present, it is available at
12 locations. According to Arya, the company has been able to save
about $1,600 for a talk time of 9,300 minutes across the 12 locations
over a period of two months. To leverage on more cost savings the
company will be extending the VIP facility to additional 35 locations
by September 2002.
MIS: The IT team has developed an internal decision support system by

using technologies similar to data warehousing and data mining. The MIS
tracks various areas like taxation, trend analysis, financial, inventory, stock
movement reports, information by regions. For instance, the marketing
would like to track down the sales of various categories of products, by
business line, regions, periods to analyse and understand the emerging
patterns

CHAPTER: 18
Avon - A Direct Marketing

Review

Avon - A Direct Marketing Review
Working from home and developing their own direct marketing small
business is an idea many Americans are looking to engage in. Are you
looking to work from home and make an unlimited amount of money?
Certainly you have heard of Avon; a very large company and still growing.
They are one of the fastest growing direct marketing companies in over 135
counties; even growing fast in China and Russia.
Founder, David H. McDonnell, gave up selling books when the perfume he

gave female customers became more popular than his novels. Because of
this, in 1886 he started his own small business, California Perfume
Company, by direct marketing the same perfume. But before long he knew
that he needed to hire a representative, Mrs. Albee. Avon. To this day she
has over 5 million representatives and still hiring representatives.
Many entrepreneurs are looking for a company with excellent products that
are easy to sell. As a direct marketing company, Avon uses door to door
sales, catalogs and the internet. Every distributor is given a website for their
guests to visit and place orders; thus making sales more abundant. You too
can become a representative, work from home and own your own small
business while learning how to use direct marketing to your favor. You will
meet many new people in your neighborhood and even in your community.
Don't you want to own your own small business and work from home?

As an Avon representative, you will need to have the ability to sell the
cosmetics and perfume, not to mention all the other products available.
Becoming a trained Avon Beauty Advisor is a better way to make money
than being a representative for a couple of reasons.
First, as a trained Avon Beauty Advisor you have the credentials backing
you. In today's economy and society, people love credentials. If you have
been trained by Avon, then you know what you are talking about which
makes your customers trust you and feel like they have their own personal
beauty advisor. Who doesn't want a beauty advisor?
The next reason is the ability to recruit people to become representatives and
trained Avon Beauty Advisors. When you meet a successful entrepreneur,
don't you want to find out what they are doing to have financial freedom? If
you were offered the same opportunity to create the same kind of success,
wouldn't you give it a shot? Skeptic or not, the curiosity is brewing inside
and to answer that curiosity, you need to give it a try.
As with any direct marketing business, Avon is a huge commitment and

takes time to build a small business. This is an actual work from home
opportunity with a very real potential to make money. You need to design,
develop, and distribute your own flyers; in addition to purchasing samples,
cards, bags, and whatever else it takes to make sure your customers have an
awesome Avon experience.

CHAPTER: 19
Eureka Forbes: Friend for

Life

Eureka Forbes: Friend for Life

Brand: Eureka Forbes
Company: Shahpoorji Pallonji group
Agency: Triton

We are ‘Your friends for life,’ we are Eureka Forbes!

It dates back to 1982, when health ambassadors from Eureka Forbes, with a
new concept of living in a clean environment and drinking water in its purest
form knocked on your door! They called themselves friends for life and they
proved that they indeed were. Eureka Forbes continues to be the best friend
in an Indian Household even after two decades and the sentiments have not
changed.
Eureka Forbes is a part of the Shapoorji Pallonji Group and today it is a 12

billion INR, multi product and multi channel corporation. Incepted in 1982,
we have put 28 years of consolidated efforts to become the undisputed
leaders in domestic and industrial Water Purification Systems, Vacuum
Cleaners, Air Purifiers & Security Solutions. Being Asia’s largest direct
sales organization, our force of 7000 direct personnel touches 1.5 million
homes. We have one of the largest networks catering to more than 131 cities
and 398 towns across the country! We also have a 10,000 strong dealer sales
network and over 58 distributor strong Industrial Sales Network.
Dedicated to the cause of providing healthier living, today, we have

successfully established ourselves as a business super-brand and our
dedicated team works around the clock to make your lives healthier and
more secure! We strive to provide the best after sales service and to achieve
the same we have over 1500 service centers and as many as 4500 company
trained technicians who visit over 20,000 Indian kitchens daily!
Our efforts have borne us fruits in the form of the numerous awards that we
have received from time to time:
• Winner of 6 prestigious UNESCO Water Digest Awards 2009-10.

• Winner of the Frost & Sullivan Award for the Best Company from the
domestic point of use, Water treatment systems and Customer Service
Leadership Award.
• We have been ranked amongst India's Most Admired Consumer
Durable Companies.
• Awarded Best Employers 4 times in a row.

• Winner of 'Most Admired Knowledge Enterprise' MAKE- Asia

Awards.
BUSSINESS PRACTICE
The customer is the sole focus of our business. We constantly direct all our
efforts to towards achieving maximum customer satisfaction by delivering
products and services to the best value and quality.
We strive to honor our commitments, implied or expressed to both our

internal and external customers.
We stress on integrity, transparency and consistency in all our dealings. We

always strive to have trusting, mutually beneficial and long-lasting
relationship with out business associates. We seek to maintain a warm,
positive and friendly work environment where everyone shares a mutual
feeling of respect for each other. We encourage teamwork, motivate and
train our people to perfect their skills for the benefit of the individual and the
organisation. We set, communicate and pursue clear operational guidelines
and business strategies. We empower people at appropriate levels to achieve
their goals. We recognize and reward merit and performance. We strive to
make the organisation a responsible corporate citizen.

CHAPTER: 20

Case Study of Eureka

Forbes
Critical Analysis of Success of Water Purifier Industry a

Case Study of Eureka Forbes Ltd, India by Anubhav
Singh
in Business/Customer Service (submitted 2010-03-01)
Summary
Water Purifiers as a segment has seen a lot of activity in the last few yeas. It
has seen the entry of many new players has entered into this business
Eureka Forbes followed the globally 'tried and tested' direct selling route for
marketing its products in India, thus becoming one of the first direct selling
companies in India. The company believed that its core strength was its
people. The case let provides details about the company's advertising
strategy that projected a friendly and trustworthy image of its salespersons.
It discusses the Customer Relationship Management (CRM) initiatives of
Eureka Forbes. Finally, it analyzes the change in advertising strategy and
positioning by Eureka Forbes. Eureka Forbes Targeted at the upper middle
class families, these products were never considered a priority. Since most of
the middle class families could afford a maid, it was a fight between Maid
and the Machine.

Because of the low interest and since the product benefits needs to be
demonstrated to the customers, conventional distribution was not viable.
Hence EFL chose the less traveled direct selling route. The Eureka Forbes
sales man was called Eurochamp. It was a tough job for these salesmen who
had to go through the "cold calls" to get a sale. At one point of time, because
of the aggressive nature of these sales persons, people became scared even to
listen to these sales persons. Now this aggression has mellowed down to a
more professional sales approach. EFL has also tried to position their sales
persons as problem solvers rather than sales officers. The campaigns tried to
build the image of a Euro champ as a Friend rather than one that is after the
money. During the late eighties, a Eureka Forbes salesman was generic to
direct selling.
This study is my first step to understand direct selling route.
Observation and Learnings
As a part of MBA curriculum I got tremendous experience from my college,

but this dissertation increase my knowledge not only about direct sales
marketing as well as the whole concept of Marketing. Before starting this
project I also didn't know that complexity with the direct sales channels but
after that I observe that it is very important thing for marketer, product and
customer also.
Direct selling company Eureka Forbes Ltd is eyeing a 10-12 per cent growth
in sales during the current fiscal. The company will be appointing a new set
of franchisees for its products, especially in smaller towns, and give more
thrust on two of its fledgling divisions - electronic security systems and
industrial sales.
Eureka Forbes, a 60:40 joint venture between Forbes Gokak of the Tatas and
Electrolux AB of Sweden, had clocked a turnover of Rs 390 crore for the
year to March 31, 2002.
The company, as of now, has 300 franchisees across the country and plans to
appoint another 200 in the smaller cities where it is not present currently.

According to the product manager of Eureka Forbes, P Rajendran, the

electronic security systems and industrial sales divisions (both began
operations frpm 1996) are both poised for growth this year as the company is
banking on the success of a slew of new launches and product upgradations.
"We hope to double our turnover in these two divisions this year," Mr
Rajendran said.
Eureka Forbes' industrial sales division reported a turnover of Rs 9 crore in

2001-02 and has tied up with Danish industrial cleaning products giant
Nilfisk Advance Pte.
The division currently offers industrial vacuum cleaners, floor cleaners and
high pressure water cleaners to customers in India.The company's other unit,
electronic security systems division, has a strategic partner in the Canada-
based Digital Security Controls and offers products in intrusion detection
systems, surveillance systems, access control and fire detection systems.
The products are all placed in the below Rs 10 lakh category to avoid
confrontation with another Tata group company Tata Honeywell. In its
direct sales division, which accounted for Rs 290 crore of the company's
total turnover of Rs 390 crore in 2001-02, the company is eyeing a sales
figure of 3.5 lakh units of water and air purifiers. The company sold 3 lakh
units of the same product last year.
Conclusion
This project focuses on direct marketing and success strategy of Eureka

Forbes and its fundamentals. I have tried to cover all related issues with the
Direct marketing pioneer Each and every product has different Strategy and
has different use. In this project it is very easy to find different Strategy for
different products and success strategy of Eureka Forbes through direct
marketing channels.
In the analysis of questionnaire we can easily find Success Strategy

importance for an organization lf. In the questionnaire administration of
EUREKA FORBES respond very well and took it very initiative.
In other hand we can see in the rapidly urbanizing world, friendly salesman
is substantial to obtain basic consumer goods. It is also important to satisfy
consumers' needs in an effective way. Direct marketing pioneer should

fulfill its function with a minimum overall resource use and its efficiency
offers more service with less resource use. Especially at water purifier
industry distribution, While players such as LG, BPL and Philips continue to
gather meagre volumes in this segment, Eureka Forbes believes in creating a
market for products which do not sell through dealers, especially vacuum
cleaners, which need to be demonstrated to consumers. Mr Palekar pegs the
vacuum cleaner market at Rs 120 crore with a growth rate of 10 per cent.
For instance, its latest offering is Euroclean Bullet, a compact vacuum

cleaner with dyno-centric power while the yet-to-be-launched Euroclean
Ultima will provide steam-based technology. While the new models would
be locally manufactured through its group company Fal Industries Ltd, it
imported its earlier models (Euroclean Swift and Euroclean Wet & Dry)
from companies such as Align Machine Tools of Taiwan and Shop Vac of
the US.
However, according to Mr Rajeev Karwal, President, CETMA, the retail

market for vacuum cleaners is not exactly growing. "Unlike the dry vacuum
cleaners which come cheap, it is wet cleaning which works in India and the
models in this category are too steep." The whole analysis shows the
importance and its viability. Limitations
When I am going through this project there are some points that can say
drawbacks of this project -
- I had limitation to borrow information from their employees.
- I had limitation to borrow information from their system and data ware
house.
- I had limited information on internet that could be borrowed by us. So

these are the main limitations that i can get from main constraints.

CHAPTER: 21

CONCLUSION
CONCLUSION
Direct marketing is probably the most personal form of marketing. Direct

marketing is a way to communicate with a consumer while recognizing him
as an individual. This type of marketing puts a face and a name to every
consumer that receives direct mail marketing. It is something that an
individual can hold in his hand and examine for extended periods. Direct
marketing helps establish a relationship with customer through business.
One can communicate various messages about the business to customer. In

turn, the customer will very likely respond to the call to action by visiting
business or making a purchase. In contrast to other forms of marketing that
are generalized and fleeting, direct marketing is specific and tangible. One
can create distinctive direct marketing pieces that capture target’s attention
and rouse interest in his business products and services.

Direct marketing can really boost activity for business. It is a great way to
promote business and foster a relationship with the customer at the same
time.
Direct marketing is a form of marketing that attempts to send its messages

directly to consumers, without the use of intervening media. Direct
marketing differs from regular advertising in that it does not place its
messages on a third party medium such as a billboard or a radio commercial
would. Instead, the marketing of the service or commodity is pitched directly
at the consumer. Most direct marketing is done by companies whose only
function is to manage and perform direct advertising, rather than by the
advertised entity itself. Direct marketers have been long time customers of
computer databases, and they often have very sophisticated criteria of
inclusion and exclusion in their mailing lists.
.
Direct marketing is a sub-discipline and type of marketing. There are two
main definitional characteristics which distinguish it from other types of
marketing. The first is that it attempts to send its messages directly to
consumers, without the use of intervening media. This involves commercial
communication (direct mail, e-mail, and telemarketing) with consumers or
businesses, usually unsolicited. 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 traceable, measurable
positive (but not negative) responses from consumers (known simply as
"response" in the industry) regardless of medium.
If the advertisement asks the prospect to take a specific action, for instance
call a free phone number or visit a website, then the effort is considered to
be direct response advertising.
I feel Direct Marketing is slowly but steadily taking over the other marketing
tools as it is supported with more personalized approach. Especially in India
where there is still a huge untapped consumer segments this type of
marketing will work for all type of organizations and businesses. With the
entrance of MNC’s from all over the world in the Indian market, it is the
time when Direct Marketing in India has reached to the international
standards. With less investment and huge response, I feel, Direct Marketing
will be soon the main marketing strategy for the small scale businesses as
well as the huge MNC’s and big organizations.

CHAPTER: 22
BIBLIOGRAPHY

BIBLIOGRAPHY
WEBSITES;
MANAGEMENTPARADISE.COM
GOOGLE.CO.IN
WIKIPEDIA.COM
www.EzineArticles.comexpert=Drake_Palmer
BOOKS;
DIRECT MARKETING BY SWATI M. SABALE.
MARKETING MANAGEMENT BY V.S. RAMASWAMY AND S.

NAMAKUMARI.
MARKETING MANGEMNT BY TAPAN K PANDA.

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SUCCESS OF DIRECT MARKETING IN INDIA

TYBMS/BCCA’S INSTITUTE OF MANAGEMENT STUDIES 1

Introduction to Direct Marketing

Direct Marketing is a marketing process where companies market to

Direct Marketers communicate directly with customers, often on a one-to-

Direct Marketers use detailed databases where they understand customer’s

Direct Marketing is also referred to as Interactive Marketing or Database

TYBMS/BCCA’S INSTITUTE OF MANAGEMENT STUDIES 2

TYBMS/BCCA’S INSTITUTE OF MANAGEMENT STUDIES 3

Direct marketing in India

The mail service in India is slow though generally reliable. Telephone

Direct Marketing is especially popular in India because by nature Indians do

TYBMS/BCCA’S INSTITUTE OF MANAGEMENT STUDIES 4

TYBMS/BCCA’S INSTITUTE OF MANAGEMENT STUDIES 5

Direct marketing is an interactive marketing system that uses one or more

1. Direct marketing is the planned implementation, recording, analysis

2. Direct marketing is any activity that creates and exploits a direct

The definitions bring about 3 key elements:

Interactive system: - There is a 2-way communication between the marketer

Measurability of response: - The number of coupons indicates the response

Direct Marketing activities are not location specific: - It is not necessary

TYBMS/BCCA’S INSTITUTE OF MANAGEMENT STUDIES 6

Direct marketing is a type of advertising campaign that seeks to elicit

TYBMS/BCCA’S INSTITUTE OF MANAGEMENT STUDIES 7

TYBMS/BCCA’S INSTITUTE OF MANAGEMENT STUDIES 8

History and Development of Direct Marketing

• 1948 – The first book catalog (Italy)

The first modern mail-order catalog was produced by Aaron Montgomery

TYBMS/BCCA’S INSTITUTE OF MANAGEMENT STUDIES 9

TYBMS/BCCA’S INSTITUTE OF MANAGEMENT STUDIES 10

OBJECTIVES OF DIRECT MARKETING

Ways of Achieving the Objectives

TYBMS/BCCA’S INSTITUTE OF MANAGEMENT STUDIES 11

Thus one may offer:

 The Free Trial, where goods or services may be enjoyed on approval

 The Sale on Credit where no down-payment is demanded. This is, of

TYBMS/BCCA’S INSTITUTE OF MANAGEMENT STUDIES 12

 Insurance offers, where the initial application may lead to a ten

Flexibility of a different sort governs the third category we are going to

Moreover, a one-stage sale predetermines the way in which the respondent

Let us therefore look at some simple multi-stage operations:

TYBMS/BCCA’S INSTITUTE OF MANAGEMENT STUDIES 13

 Sales follow-ups, where information about a product is advertised,

an interview (as with the armed services) or may go directly to an

TYBMS/BCCA’S INSTITUTE OF MANAGEMENT STUDIES 14

This sort of approach is particularly appropriate for a profession like

5. Sales promotion linked opportunities.

Many companies - perhaps most companies that are reasonably

In all these cases, either direct contact is involved, or it can be

In fact, one of the most powerful weapons at the direct marketer's

TYBMS/BCCA’S INSTITUTE OF MANAGEMENT STUDIES 15

TYBMS/BCCA’S INSTITUTE OF MANAGEMENT STUDIES 16

PRINCIPLES OF DIRECT MARKETING

1. Planning your marketing activity: All direct marketing should form

2. Targeting your customer: Customer information should be stored and

3. Measuring your marketing activity: The results of direct marketing

4. Tracking This involves monitoring customers' responses over time,

5. Customer behavior: Tracking the spending patterns and general

6. Future strategies: One aim of marketing is to maximize the value of

7. Developing long-term loyalty: By targeting the right customers,

TYBMS/BCCA’S INSTITUTE OF MANAGEMENT STUDIES 17

your products, you will protect your customer database. Your