DIRECT MARKETING

INTRODUCTION

Dominos Pizza entered the Indian market only post 1996. But in less than five years they have been able to redefine the paradigms in food business and service sector.

The success of Dominos is attributed to:

a) Clearly defined and communicated service delivery standards. b) Effective implementation of direct marketing strategy. c) Customer relationship management (CRM) practices. d) Empowering the customer so that he/she could create his/her own product.

Dominos as mentioned earlier, have used the direct marketing strategy to reach out to customers. Their advertisements initially showed the telephone numbers of their different outlets and promised to deliver hot fresh pizzas at customers doorstep in 30 minutes. Subsequently, once MTNL and BSNL came up with the toll free number 1-600, the company only advertised this number for order placement. This number was named by Dominos as the Hunger Help Line. On receipt of the call, the order was transferred in a seamless manner to the outlet nearest to the caller, who then produced and delivered it to the customer within the stipulated 30 minutes. It also tied up with mobile phone companies for a similar service for

DIRECT MARKETING customers. The menu card too was delivered along with the order, so as to keep the customer informed of Dominos different offerings and their prices. This also ensured that Dominos was within easy reach of the customer, right at home.

Like Dominos today there are several food chains, consumer product companies and service organizations that are using the direct marketing strategy for effectively reaching out to their customers. Direct Marketing is gaining importance, especially in urban markets and has emerged as an alternative form of marketing. Brands like Orange cellular phone services have been built through an effective use of direct marketing tools.

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INTRODUCTION ABOUT DIRECT MARKETING

If a person is a Citibank, Visa or Master card holder, living in a metro or class one town, by now he would probably be accustomed to receive some unexpected mail inviting him to a launch function of a new product, a live demonstration of a gadget, an exhibition of designer jewellery or a music concert sponsored by some business firm. He may also get some promotional literature about an investment scheme or some share application forms for public issues of companies, or be offered a hefty discount on subscription of a magazine or an early bird incentive on booking a residential flat.

Even in the class two and smaller towns, people are getting surprise gifts and greeting cards on occasions like anniversaries, birthdays and the new year. This is an indication that direct market is catching up in the post-liberalization ere in India. Several firms, otherwise marketing their products through conventional channels, are now also using the direct approach to communicate with and retain their customers. Different firms use different methods to zero in on the prospects included in their hit lists.

Direct marketing as a concept has evolved to its present-day form through various stages of transformation. Originally a form of marketing in which goods moved from producer to consumers without involving middleman, firms selling

DIRECT MARKETING directly to the end users through their own retail outlets and / or salespersons were said to be involved in direct marketing. With the development of other form of personal communication, such as the telephone, direct marketing was redefined.

According to the Direct Marketing Association of the USA (as quoted in Kotler 1991), Direct Marketing is an international system of marketing which uses one or more advertising media to effect a measurable response and/ or transaction at any location.

Direct Marketing thus includes any activity whereby firms reach the customer directly as an individual, who responds to them directly. It differs from conventional marketing in the sense that it talks directly to the prospect on a oneto-one basis without involving any intermediary. Direct Marketing programs are usually designed to achieve a measurable result in a relatively short duration of time. These differ from other promotional activities, though they may use the same media or sometimes the same techniques, such as coupons and samples.

In the absence of conceptual clarity, direct marketing is often defined very narrowly as a synonym of some simple specific function such as direct selling, mail-order selling or direct distribution. In fact, it is much more than all these. A complete system of integrated functions aimed at satisfying customer needs more effectively, it is by no means a short-term quick buck affair.

DIRECT MARKETING

In conventional marketing, firms wait for the customer to walk into their stores, whereas in direct mode firms prefer to go out ad get the customer before he steps out of his home. It is a very focused activity that follows a firm to concentrate on a chosen segment of customers and interacts with them more effectively through different media. Being a more precise and goal-oriented activity it is more suitable for firms operating in specific niche markets.

According to the number one direct-selling firm in the world, Amway corporation of the USA (estimated sales for 1995US$6.3billion), Direct selling moves products from the manufacturer/supplier to the seller and consumer without intermediaries. It differs from direct marketing in the sense that direct marketing companies depend more on mailing, catalogue sales, direct response and coupon sales, telephone and telemarketing and the like; and now they are also selling via computer networks such as the Internet. In contrast, direct selling is always performed through the salesperson.(As quoted at the CII-Amway Seminar1996).

In direct marketing goods move from Manufacturer Consumer

In direct selling goods move from Manufacturer Distributor Consumer

DIRECT MARKETING Some newer forms of direct selling such as multiplayer marketing (MLM) may involve different layers of distributors and salespersons selling to the customers directly. Amways definition notwithstanding, direct selling as a concept is nothing more than a mode of direct distribution.

The early practitioners of direct marketing in India include Readers Digest magazine, Bullworker exerciser, and some regional language publications that used mail coupons to increase circulation. Of late, catalogue-shopping firms such as Burlingtons have also made forays into the Indian market, but achieved only limited success. However, in the late1980s, it was the success of Eureka Forbes vacuum cleaners and Real Value Appliances Cease Fire brand of fire extinguishers (will you call it direct marketing or direct selling?) that signaled the dawn of direct marketing in India.

At the professional level, the credit of pioneering direct marketing in India goes to the media person Ram Nathan Sridhar who founded O&M Direct in 1987, exclusively to handle and promote direct-marketing activities in a professional manner. Since then, he has been selling the idea of direct marketing to savvy marketers with missionary zeal and spirit.

Today, all major advertising agencies in the country such as Hindustan Thompson Associates (HTA), Lintas, Mudra, Trikaya Grey, Response, Contract and many others have set up separate divisions to cope with the growing

DIRECT MARKETING demand for direct marketing. Presently, direct marketing accounts for only about 14 percent of the Rs 45,000 million Indian ad spend, but going by the current trend of 35 percent annual increment in expenditure on direct marketing, it is going to be a big business in the next couple of years.

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

Direct marketing is an interactive marketing system that uses one or more advertising media to affect a measurable response and /or transaction at any location.

This definition emphasizes a measurable response; typically a customer order. Thus direct marketing is sometimes called direct-order marketing.

Today, many direct marketers see direct marketing as playing a broader role, that of building a long-term relationship with the customer (direct relationship marketing). Direct marketers occasionally send birthday cards, information materials, or small premiums to select members in their customer base. Airlines, hotels, and other businesses build strong customer relationships through frequency award programs and club programs.

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WHAT IS DIRECT MARKETING

Direct Marketing is an interactive mode of marketing through which the marketer reaches out to his target market at any location. . An analysis of this definition brings out three key elements, namely:

1) It is an interactive system in the sense that there is a two-way communication between the marketer and his/her target market; the response or non response of the customer completes the communication loop in the direct marketing programme. For example, when the customer fills in the response coupon in an advertisement or a catalogue and mails it, he/she communicates to the marketer and hence completes the communication loop.

2) Another element is measurability of response. As mentioned above the number of coupons received indicates the response rate to the marketers communication.

3) Direct marketing activities are not location specific; it is not necessary for the customer to physically interact with the marketer, he/she can establish a contact through mail, phone, fax, or the internet.

DIRECT MARKETING As mentioned above, direct marketing is an efficient way to promote and sell products and services in a highly competitive market. The goal of direct marketing is always a response

from the customer. Direct marketing has also been known by other terms like direct selling, mail order selling or catalogue selling. Today direct marketing uses all these tools and is based on a customer database. In fact the key to successful direct marketing is the development of this database.

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WHY DIRECT MARKETING

The growth of direct marketing in India can be attributed to environmental complexities and the concept of bargaining power. Customer life styles have changed especially in metros and large cities. Todays customer looks for convenience in shopping and getting the product or service delivered in the comfort of his/her house. Teleshopping, home shopping channels, catalogue marketing and online shopping are some of the tools that enable companies to cater to this core customer value.

Globalization of markets and the internet direct marketing. Today a firm have further facilitated the growth of need not have operations in all its markets but can still cater to the world demand. Dell computers and Amazon are two leading examples of successful direct marketing around the world.

Today the cost of a retail shelf at outlets in major cities is prohibitive. Fragmentation of media and audiences also imply higher advertising budgets. With customer loyalty on the wane and the costs of marketing increasing, firms

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DIRECT MARKETING margins have come under pressure. Productivity of marketing resources is now as much of a concern as that of any other resource. Direct marketing helps

HOW DIRECT MARKETING WORKS

Direct marketing, as practiced by professionally managed firms is a four-step process:

1. Identifying prospects 2. Establishing contact 3. Booking the order 4. Maintaining contacts to develop a mutually beneficial, long-term business relationship.

Identifying prospects and segmenting them into various categories based on certain specific criteria is critical to the success of direct marketing. This is done in different phases. In the first phase, a preliminary list of potential or may be customers is made through random mailing, house calls, or mass media advertisements using coupons or some other contact device. In marketing parlance it is termed cold listing.

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DIRECT MARKETING This cold list is thoroughly scrutinized and attempts are made to identify those who are not likely to use the proposed product or service due to incompatibility of need, income, age, sex, occupation or any other reason. All such people who dont qualify as prospects are dropped from the list. The residual list is then known as the hot list. Firms may sometimes seek to gather additional information about those included in the initial list by contacting them on telephone or through other convenient media.

The next step is to draw a detailed profile of the prospect. This may include information on consumption habits, purchase behavior, personality and lifestyle, social class, exposure to media; and demographic particulars such as age, income, education, profession, family size, domicile and complete postal address. Technically this step is known as profiling the respondent or response graphic.

The list is further split into separate clusters of identical groups, using some demographic, psycho graphic, or behavioral parameters. This exercise is termed segmentation. Firms now adopt many innovative ways of clustering, using novel parameters such as traveling habits, food preferences, ownership of automobiles, possession of assets and durables, and taste for music and art.

Finally, each cluster is researched using some predetermined criteria, to identify the specific segment or segments to be targeted for marketing the

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DIRECT MARKETING product. This exercise is known as targeting. If the product is a high-value item such as jewellery, a computer or an expensive gadget, direct marketing goes into further details and makes an elaborate study of each individual included in the target segment. This is known as individualization. Now the firm may focus on the specific needs of the individual customer. Let us now see how it works in actual practice.

Having identified the customer and prepared a database of individual profiles, the next step is to call at the residence of individual prospects for live demonstration or to offer a free sample of the product. Since the individualistic approach ensures better chances of being heard, it is far less difficult to get an order for the product. In the afore-said example, the firm was successful not only in selling its gadget to a majority of the host-listed respondents, but in the future too, this database may be of immense help in identifying and targeting customers if it introduces some related product such as a blood sugar or body weight monitor, or a self testing kit for diabetic patients.

Finally, having been able to sell the product or service to a customer., it is essential to keep in touch with him/her through mail, telephone or any other means of communication, to retain him / her as a customer. To create a lasting relationship, firms must maintain regular contact and update their data according to the changing needs and tastes of the customers.

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DIRECT MARKETING MIX

The marketing mix in direct marketing mode, by and large, remains the same except for the communication programme and customer service, which have acquired new meaning. For example, if the marketer guarantees delivery of the product within a defined time frame, also promises to take it back in case it fails to live upto customer expectations and return his/her money, then the customer service executive cannot refuse a claim. This is opposed to general marketing where the marketing can put several disclaimers and may refuse the customer. In direct marketing, refusal to accept customer claim without any question may cost the marketer significant losses as he not only loses that customer but subsequent prospects as well. In general marketing, the loss can be contained through other elements of the marketing mix. In addition to marketing mix decisions, the direct marketer has to pay special attention to the following factors in decision making:

1) Communication Programme:

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DIRECT MARKETING This involves both creative and media decisions. The creative decisions center around the copy platform, graphic design elements, mailers, stickers and so forth. The media used by direct marketers are mailers, telephone, television and the internet. Direct response print and television advertising are particularly effective in generating response to the offer, especially if it is complex to understand. Also, the direct marketer today uses various outdoor, retail panels( Just Talk and BPL MOTS brands of prepaid Sim cards in Mumbai) and even stickers to retain the brand at the top of customers mind. These also serve the purpose of a reminder.

2) Customer Service: Customer service is a key input in direct marketing. In a direct marketing, physical contact with the customer is low, and it is the quality of service that facilitates customer decision making. Service, therefore, is an investment and cannot be ignored. The customer service mix today involves speed and accuracy of order fulfillment, immediate customer complaint resolution, etc.

3) Timing and Sequencing: This factor involves determination of whether the product or service is offered once, as a part of the campaign or continuously. This will obviously involve campaign decisions like whether to have bursts, pulsing or a continuous campaign.

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DIRECT MARKETING

DATABASE DEVELOPMENT

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

Characteristics of a Good Database:

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DIRECT MARKETING 1) Each customer or prospect should be treated an individual entity and hence a separate record for him/her should exist in the marketing database. Market segments are an agglomeration of such individual customers.

2) Each such marketing record should contain all the relevant information and access details like name, address, telephone numbers, frequency of product use, experience with the product, industry and decision making units for

organizational customer.

3) This information should be available to all departments and employees of the company involved in the direct marketing programme so as to enable them to be customer friendly.

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

5) Information technology tools should be used to strengthen this database and also develop corporate responses to the customer. These tools can also be used to identify opportunities and threats in the customer environment and craft appropriate responses which will help the marketer to exploit opportunities and neutralize threats. The use id these tools should also help in optimum resource utilization.

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The Strengths of Database Marketing are:

1) Measurability: Unlike conventional marketing, direct marketing response can be measured. This helps firms redefine their marketing programme if required and also to customize it to segment needs.

2) Testable: Effectiveness of different elements of a marketing programme can be tested.

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

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THE BENEITS OF DIRECT MARKETING

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

Sellers also benefit. Direct marketers can buy a mailing list containing the names of almost any group: left-handed people, overweight people, and millionaires. They can personalize and customize their messages. According to Pierre Passavant: We will store hundredsof messages in memory. We will

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DIRECT MARKETING select ten thousand families with twelve or twenty or fifty specific characteristics and send them very individualized laser-printed letters. Direct marketers can build a continuous relationship with each customer. The parents of the newborn baby will receive periodic mailings describing new clothes, toys, and other goods as the child grows. Nestls baby food division continuously builds a database of new mothers and mails six personalized packages of gifts and advice at key stages in the babys life.

Direct marketing can be timed to reach prospects at the right moment, and direct marketing material receives higher readership because it is sent to more interested prospects. Direct marketing permits the testing of alternative media and messages in search of the most cost-effective approach. Direct marketing also makes the direct marketers offer strategy less visible to competitors, finally, direct marketers can measure responses to their campaigns to decide which have been the most profitable.

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DIRECT MARKETING

FACTORS CONTRIBUTING TO THE GROWTH OF DIRECT MARKETING IN INDIA

In the international market direct marketing has evolved through the catalogue route. It was the catalogue marketer of the 1930s who set the pace, but it took direct marketing several decades to reach its present-day multimedia, interactive modes status. In India, direct marketing was launched on the mailorder platform in the 1950s.but the growth in the earlier days was sluggish and the practice was confined to only a product categories. Most major developments in this area took place only after the consumer boom in the mid 1980s.

Direct marketing in India has since grown by leaps and bounds. With the advent of competition in the 1990s, several firms such as Philips, Telco, Titan

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DIRECT MARKETING and BPL who were earlier marketing their product through conventional channels only are now turning to direct marketing to strengthen their marketing efforts and increase their consumer base. They are integrating direct marketing with conventional distribution to get closer to their customer.

The following major factors have contributed to the quick growth of direct marketing in India:

Successful replication of overseas products and marketing practices

in India.

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

Change in the Indian business environment due to liberalization

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DIRECT MARKETING

Some major changes in the Indian business environment, especially after 1991, made the domestic markets for many consumer and industrial products more competitive. For the first time, several business firms that were well entrenched in their markets felt the heat of competition. It was now essential for them to get closer to the customers to protect their markets. Many of them, such as Onida, HMV, BPL and Titan who were selling their products only through agents and middlemen, switched to a parallel channel of direct marketing by opening several exclusive retail shops. The aim was to keep in direct touch with the customers and provide certain services that were not being provided by the middlemen.

Another objective of opening exclusive showrooms was to build an upmarket image of the company by demonstrating the full range of products. The ambience and dcor of the exclusive showrooms also helped these firms in adding value to their brands. LML Vespa, Liberty shoes, Bausch& Lomb eye care products and several others ventured into direct retailing probably due to this reason alone. Service firms such as ITC Hotels and ANZ Grindlays Bank found direct marketing very effective in retailing customers and weathering competition.

Middlemen getting stronger.

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DIRECT MARKETING Several firms such as those in the publishing business, are now increasingly opting for direct marketing to reduce their costs of distribution. Over the years, middlemen in India have become very strong and demanding. In pharmaceuticals, IMFL (Indian made foreign liquor), packaged food and several other industries, the market is in fact controlled by middlemen, who dictate terms to manufacturers. In the FMCG category any new firm wanting to enter the market is virtually at the mercy of middleman. Because of higher mark-ups the cost of distribution for products like soft drinks, confectionery, ice-cream and frozen goods has gone up to the extent that in some cases it is even higher than the cost of production. If the trend continues, it may prompt many more firms to check the direct marketing alternative.

Another reason for the spurt in direct marketing activities is that dealers usually push brands selectively, depending upon their equation with the manufacturers. Therefore to protect their brands from discrimination and to get direct aces to the market, more and more firms are now opening their exclusive showrooms, especially in large cities and towns.

Advent of cable television.

Proliferation of satellite television channels and the resultant rise in cable TV connections in urban and semi-urban India has offered an excellent opportunity for marketing firms to exploit this new high-tech medium for direct

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DIRECT MARKETING communication. Teleshopping firms such as Dee's Teleshopping, Teleshopping Networks (TSN) and Asian Sky Shop (ASS) are now marketing jewellery, toys, cosmetics, watches, leisure products, domestic gadgets, car finance and many more products and services through their small screen.

The USP of Teleshopping is the convenience of shopping from home and getting the goods delivered at ones doorstep. The selection of products to be marketed through Teleshopping, therefore, depends largely on the target audience and the timing of the programme. As this medium of retailing is relatively new to Indian firms, companies are mostly concentrating on unique household items and targeting up-market housewives.

Large database maintained on computers

Computers have provided the real boost to direct marketing by facilitating maintenance of large database on consumers. With the enormous computing power at their command, firms can now store update and use large quantities of data for profiling and individualizing their customers. Computer based analytical techniques such as non-parametric multidimensional scaling and perceptual mapping have helped firms in segmenting their markets and targeting their customers. Taking advantage of computing power, firms like Johnson & Johnson, for example have created a database of more than 10,000 mothers in Mumbai, each

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DIRECT MARKETING with a baby less than two years old. They have collected this data from hospitals and maternity homes. Nestle have carried out similar exercises in other metros for its Cerelac brand infant food. ITC Welcome Group Ltd has complied a detailed database on all CEOs and senior managers in the country. This included details about each individuals travel pattern, destination frequently visited, and choice of food and accommodation. Telco is reported to have put together an immense database on 145000 bus and truck owners around the country.

In fact, database-directed marketing has become a potent weapon for acquiring a competitive edge in products and services where differentiation between brands is difficult. A bold, powerful and direct personal communication that adds value to the product and establishes a lasting relationship with the customer is now possible due to computerization. Ability to file, amend and retrieve data has changed the procedures, prospects and profitability of direct marketing.

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FUTURE OF DIRECT MARKETING IN INDIA

The future of Direct Marketing in India is dependent on the following:

1) Reaching out to non-metro/non-urban market: As metro and urban markets get saturated by products and services promoted in both general and direct marketing models, the key to any direct marketing campaign lies in expanding its reach to rural and semi rural markets. Infrastructural constraints have so far come in the way of the direct marketer. But with rural cyber cafes, satellite television reaching rural areas, telecom booths and mobile telephony now gaining popularity, it should be possible for the marketers to reach out to their target market in these areas. Indian post offices are located in the farthest corner India and services villages with a population as

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DIRECT MARKETING low as 20 households. These offices can be used as an effective medium to communicate, deliver and even service the rural consumer. IDBI, ICICI, SBI and other financial institutions are today directly marketing their mutual funds and financial products through the Indian post offices. Thus, the key to success in the Indian market lies in the firms ability to access rural markets.

2) Enhancing credibility of the offer: The Indian customer generally does not buy the product or service until he/she has seen it, touched it and experienced it. Therefore these are key ingredients in the customer selection process and the direct marketer has to enhance his credibility as he cannot offer these benefits. Therefore, he needs to pay special attention to ensuring that the customers experience with the product exceeds his/her expectations. Also he needs to focus on service to endure speedy settlement of any claims. Credibility is the key to success in direct marketing.

3) Wider use of debit and credit card: Direct Marketings success in India will be dependent on the wider use of debit and credit card as mode of payment by both the customer and the marketer. This involves a shift of transactions from cash to non cash modes and hence a change in the customers and the sellers mindset.

4) Emergence of specialized database firms:

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DIRECT MARKETING Another key factor in the success of direct marketing is the evolution of specialized Database firms. It is expensive proposition both in terms of money and time to create a customer database. This makes direct marketing feasible only for large firms. A very large component of Indian economy consists of the small and medium sized firms who cannot afford to create this database. Hence emergence and evolution of firms specialized in database management will contribute to the success of direct marketing in India.

ANALYSIS OF CASES, WHICH SHOWS THE WORKING OF DIRECT MARKETING.

CASE STUDY 1

Direct marketing of a blood pressure instrument

An electronic gadgets manufacturing firm wanted to market in India a small, hand-held electronic instrument for measuring blood pressure at home. The price of the instrument was fixed at around Rs. 3000 a piece. Being a specialty product, it was perceived to have only a limited clientele. As the firm had no establishment channel of distribution, it decided to take the directmarketing route. The product was unique in the sense that it offered the convenience of constant monitoring of blood pressures at home, in office or

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DIRECT MARKETING anywhere, without having to visit the doctor. It could save a lot of time and inconvenience, especially for busy professional, executives, businessmen and all those who had a hectic work schedule. Since it was a relatively expensive product, senior executive, professional and businessmen over 45 years of age, having an income of more than Rs 15000 per month were expected to be the prospective buyers. The firm adopted the following procedure for identifying and enlisting prospects.

In order to prepare a cold list, an advertisement of the product, along with a coupon, was released in two leading newspapers in Mumbai. Interested individuals were asked to fill up the printed coupon, and send it to the firm within 10 days to get a free booklet on management of blood pressure. Personal particulars relevant to identifying the qualifying prospects such as income, age, profession, residential address and details of any health-related problem were to be filled in the coupon.

A majority of people who responded were found to be suffering from blood pressure, obesity or heart-related problems. A cold list of about 5000 individuals was generated on the basis of filled-in coupons. This list was further scrutinized and names of apparently non-serious responding who might have sent the coupons more out of curiosity. The residual list of about 3500 respondents was treated as the hot list.

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DIRECT MARKETING Another alternative to this newspaper ad approach, as suggested by the research agency was to obtain a list of credit card holders from reputed banks such as ANZ Grindlays, Citibank, Canara bank, State bank of India and Bank of Baroda. The firm could then have sort out the names of cardholders who were above the age of 40 and occupied senior executive positions in private or public organizations. This would have formed the cold list. Next, the firms could have sent a brochure and a personal letter to them offering to arrange a free demonstration would have formed the hot list. However, this approach was not taken due to some logistic problems.

The respondents were then clustered into different segments on the basis of their health status: those who had only mild blood pressure but no other problem; those suffering from obesity and blood pressure both; those suffering from blood pressure and some cardiac problems; those who had blood pressure and diabetes with or without some cardiac problem; and so on. This database of all the listed people with their detailed profiles helped the firm in identifying specific needs of the respondents.

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Case study 2

Dial-a-computer

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

In the 1980s, Apple, Compaq and IBM created quite a flutter in the market when they decided to sell their PCs directly in phone. Most observers believed that customers would flock to the big brands and smaller guys like Dell and Gateway would soon be run over by the biggies. But somehow, it happened the other way round. Due to their lack of experience in direct marketing, the big

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DIRECT MARKETING brothers were unable to manage the new mode of retailing properly and gradually pulled out of the sticky direct marketing business.

This now leaves Dell and Gateway with a 47 percent combined share of the total mail order PC business in the USA. Many market analysts estimate their combined share to be70-80 percent by 1998. This amply demonstrates that no firm can win the marketing game solely on the strength of its products image. The total marketing strategy matters most.

It is also interesting to note that Dell and Gateway both made their debut in the computer business at lower end of the market. They started with taking orders on telephone and delivering the values for money hone PCs directly at customers door. But the scenario has now changed and mail order is a preferred mode of shopping for the best quality products. Dells average customers spend around US$2,700 as compared to US$ 2,400 spent by Compaqs customers.

Direct marketers assemble components into custom-configurated computers as and when phone calls come in, and therefore carry far as the 10 percent dealer margin does not have to be paid. As a result, when the PC market in the USA is growing at 15 percent per annum, these two firms are targeting a growth rate of 35-40 percent. Meanwhile, Gateway has also opener showrooms in Paris and Frankfurt to acquaint the European shoppers with their product range. But both remain committed to marketing directly.

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PRODUCTS MORE SUITABLE FOR DIRECT MARKETING

Industrial goods are traditionally sold through the companys own sales force. In case of high-value Industrial products, such as machines, equipments, high-tech engineering goods, and projects where long-term standing in the market and one-to-one relationship with the customers are both important, direct marketing may produce better results as compared to other approach. Madras based medium sized engineering firm, RKKR Steels has demonstrated that even construction grade steel products (such as bars, angles and frames) can be marketed directly to builders, contractors and individual buyers.

Services come next in the list of favorites for direct marketing. In service oriented business, retaining the customers and getting repeat business is critical for the success of any venture. Perhaps because of this an ever-increasing number of foreign and private sector banks, hotels, airlines, corporate hospitals, health clubs and couriers firms are now banking more on direct marketing.

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DIRECT MARKETING Individual approach, as used in direct marketing helps in creating customer loyalty, the backbone of service organization. In India, firms like ANZ Grindlays bank, DHL Worldwide, ITC Hotels, NEPC Airlines and many more have benefited immensely by direct marketing during the last couple of years.

Direct approach is also being used extensively in the marketing of financial products such as new issues of share, fixed deposits schemes and mutual funds. Real estates and plantation firms like Anasals properties, sterling Holiday resorts, Anubhav Plantation, teak Equity and many more have been making the most of direct marketing. Nevertheless, direct marketing is Viable only if the margins in the business are high enough to absorb the cost of maintaining regular contract with customers; otherwise it may turn out to be a losing proposition.

The next category of products suitable fro direct marketing is high value, high involvement consumer products such as expensive cars, jewellery, designer watcher and furniture, some specialty products that have a small customer base, such as medical equipment, health care products and special application gadgets may also be marketed by making direct contract with prospects.

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DIRECT MARKETING High-value, low volume niche marketing items such as Single malt whisky, ray-ban sunglasses, Bausurch & Lomb eye care products and premium blends of tea (e.g., editors Choice) are ideally suited for direct marketing. Many such products like exercisers, executive diaries, new compact music disks; car accessories, new kitchen appliances and expensive perfumes are normally not available at retail stores. Because of their novelty value, these may evoke better respons3e if marketed directly to the consumers.

Amway Corporations list of items more suitable for direct selling includes cosmetics, vitamins, books, cutlery, domestic electronic goods, air and water filters, clothing, food and wine, Kitchen appliances, Kitchenware, cleaning products, toys and crafts, hobby items, hand tools, automobile accessories, as well as an endless variety of catalogue items either unique to the company or sourced from third parties.

Direct marketing is also effective where the firm has a family of products to offer to the same person or household. It is far more economical and makes better business sense to sell to the known customers rather than finding a new customer every time. Some publication groups such as Living media and Spectrum Communication, who offers a variety of publications for different tastes, have taken this route successfully. Eureka Forbes benefited immensely from their database about the vacuum cleaner buyers, when they introduced another novelty product(water purifier) in the market.

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With the advent of multinational brands in the Indian market, direct marketing may also penetrate into lifestyle products categories such as fashion garments, perfumes, shoes, wristwatches and toiletries. ITC has already shown the way by opening exclusive showrooms in a few select metros for its Classic brand premium cigarettes and golf accessories.

STRATEGIES FOR DIRECT MARKETING

Strategies for direct marketing a product or service to the target customer would normally encompass the following equally importance elements: Planning the product offer Pricing policy Media strategy Distributing

Evolving the basic strategy for direct marketing requires a careful study of the market and the product, and logical planning.

Planning the product offer

A product offered through direct marketing may be one of the three types.

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DIRECT MARKETING A product specifically developed for direct marketing

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

A retail product adapted for direct marketing

A retail may be adapted with minor changes for use in direct marketing. There are several ways of making such changes. Changing the packaging, accessories, attachment and even the brand name are some of the common techniques of adoption. A multi-part product such as different volumes of an encyclopedia may be marketed as separate units. Dramatization of some features of product to make it look like different offer is another way of adapting a retail product for direct marketing. For instance it is a no-frills, basic products, the firm may stress on simplicity, user-friendliness and responsible price. On the contrary, if the product is complicated and difficult to operate, you may stress on

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DIRECT MARKETING advance technology. Nash(1986) termed this strategy as turning lemons into lemonade.

Another method of adapation involves repositioning the product on some different attributes or usage patterns so that it looks like a different product. Nash (1986) calls it changing the product without changing it. Anyone who doesnt believe this may have a hard look at some of the products currently being offered through mail order and telescoping.

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

It is always possible for a firm to use direct marketing as an additional channel to market its products, without making any change or modification in the retail version of the products. Most magazines, music CDs, encyclopedia, premium whiskeys, exercising equipment, computers, etc., are usually marketed through direct as well as conventional channels in identical forms and formats.

In the US markets, many computer firms are hawking their hardware with identical configurations by using the conventional as well as direct route. This was explained in the previous case study.

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Pricing strategy

In direct marketing, price is often used to spearhead the overall marketing strategy of the firm. Not only the price but the way it is expressed is also very important. It may be quoted in several ways: as net price excluding all accessories, freight and forwarding costs and taxes or as a package-deal price including all of these; or with some additional offers such as free gifts, guarantee or credit offers. The telescope Network (TSN), for example, offered BPL microwave oven to buyers in Bombay and Madras at the same price as in the market, with free gifts of Borosil bowls.

A new product maybe launched with a special introductory offer, or at a low invitation price or special subscription price, or with an opportunity to participate in some contest or sweepstake. Pricing strategy for direct, marketing thus has to be flexible and adaptable to different situations.

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DIRECT MARKETING Media strategy

Media strategy for direct marketing may incorporate a logical testing plan with some calculated risk, to exploit a productive campaign as quickly as possible. The media commonly available to direct marketers are direct mail, press coupons, telephone, cable TV, and television and computer networks. Each of these has its own merits and demerits. Press Coupon is gaining popularity because it is economical and gives quick feedback. The advantage of direct mail lies in its highly individualized communication. The activities of the firm therefore remains unnoticed by the competitors for a long time. Due to this unique benefit, many new products in the West are launched through direct mail.

Direct markets may use different media depending on the nature of the product and the target audience. Mumbai-based Burlingtons, for instance are currently using mail order catalogue; Music Today is using direct mail; Shie perfume and Dollop ice-cream use the telephone. O & M Direct had earlier used television to enroll volunteers for the national Literacy Mission Campaign.

In India, teleshopping is an emerging mode of direct marketing. The shape it will acquire in future will depend more on how the current players perform. In order to increase the visual appeal and make the communication more authentic and believable, the display of products is important; equally important is how and by whom. TSN has therefore selected hosts whose images go well with the products

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DIRECT MARKETING with the products they present. So, Priya Tendulkar (of Rajani fame) with her quality conscious housewife image demonstrated kitchen appliances, Mandira Bedi with all her charm hosts jewellery shows, and health products are hawked by sports star Mickee Mehta. These carefully selected hosts add the muchneeded zing to mundane selling and buying.

MAJOR DECISIONS IN DIRECT MARKETING

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

Objectives:

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

That is not necessarily the case. The direct marketing presumably had some effect on awareness and intention to buy at a later date. Furthermore, not all direct marketing aims to produce an immediate sale. One major use of direct

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DIRECT MARKETING marketing is to produce prospects leads for the sales force. Direct marketers also send communication to strengthen brand image and company preference; examples include banks that mail birthday greetings to their best customers. Some direct marketers run campaign to inform and educate their customers to prepare them for later purchases; thus Ford send out booklets on How to take Good Care of your Car. Given the variety of direct marketing objectives, the direct marketer needs to carefully spell out the campaign objectives.

Target customers:

Direct marketer needs to figure out the characteristics of customers and prospects who would be most able, willing, and ready to buy. Bob stone recommends applying the R-F-M formula ( recency, frequency, monetary

amount) for rating and selecting customers from a list. The best customers target who bought most recently, who buy frequently and who spend the most. Points are established for varying R-F-M levels, and each customer is scored; the higher the score, the more attractive the customer. Direct marketers can use segmentation criteria in targeting prospects. Good prospects can be identifies on the basis of such variables as age, sex, income, education, previous mail-order purchases, and so forth. Occasions also provide a good segmentation departure points. New mothers will be in the market for baby clothes and baby toys; college freshmen will buy computers and clothing and newly married will be looking for housing, furniture, appliances and bank

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DIRECT MARKETING loans. Another good segmentation departure points are consumer lifestyles. There are consumers who are marketers have targeted these groups and won their hears and minds. Companies and industries 24-1 provides the survey findings of Japanese consumer who tended to purchases through direct mail.

Once the target market is defined, the direct marketer needs to obtain names of good prospects in the target market. Here is where list acquisition and management skills come into play. The direct marketers best list is typically the house list of past customers who have bought the companys products. The direct marketers can buy additional lists from list brokers. Manes on these lists are priced at so much a name. But external lists have problems, including name duplication, incomplete data, obsolete addresses, and so on. The better lists include overlays of demographic and psycho graphic information, in addition to simple addresses. The main point is that the direct marketer needs to test in advance to know their worth.

Offer strategy:

Direct marketers have to figure out an effective offer strategy to meet the targets needs. Nash sees the offer strategy as consisting of five elements-the product, the offer, the medium, the distribution method, and the creative strategy. Fortunately all of these elements can be tested.

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DIRECT MARKETING Each medium has its own rule for effective use. Consider direct mail. In developing a package mailing, the direct marker has to decide of five components. Each component can help or hurt the overall response rate. The outside envelope will be more effective if it contains an illustration, preferably in color and /or a catch reason to open the envelop, such as the announcement of a contest, premium, or benefit to the recipient. Envelopes are more effectivebut more costly when they contain a colorful commemorative stamp, when the address is hand typed or handwritten, and when the envelope differs in size or shape from standard envelopes.

The sales letter should use a personal salutation and start with a headline in bold type in the form of a news lead, a how/what/why statement, a narrative, or a question to gain attention. The letter should be printed on good-quality paper and run for as many pages as are necessary to make the sale, with some indented paragraphs and underlining of pertinent phrases and sentences. A computer type letter usually out pulls a printed letter, and the presence of a pithy P.S. at the letters end increases the response rate, as does the signature of someone whose title is appropriate and impressive. A colorful circular accompanying the letter will also increase the response rate in most cases by more than its cost. The reply should feature a toll-free number and contain a perforated receipt stub and guarantee of satisfaction. The inclusion of a postagefree reply envelope will dramatically increase the response rate.

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DIRECT MARKETING Consider on the other hand, a telemarketing campaign. Effective telemarketing depends on choosing the right telemarketers, training them well, and incentivizing them. Telemarketers should have pleasant voices and project enthusiasm. Women are a script and eventually move toward more improvisation. The opening lines are critical. They should be brief and lead with a good question that catches the listeners interest.

The telemarketer needs to know how to end the conversation if the prospect seems to be a poor one. The call should be made at the right time, which is late morning afternoon to reach business prospects, and the evening hours between7 to 9 to reach households. The telemarketing supervisor can build up telemarketer enthusiasm by offering prizes to the first one who gets an order to the top performer. Given the higher cost per contact telemarketing, and privacy issues, precise list selection and targeting is critical. Clearly, other media, such as catalog mail order, TV home shopping, and so on, have their own rules for effective use.

Testing direct-marketing elements:

One of the great advantages of direct marketing is the ability to test under real marketplace conditions the efficacy of different components of the offer strategy. Direct marketers can test product features, copy, pric3es, media, mailing lists, and the like. Although direct-marketing response rates are at the

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DIRECT MARKETING single-digit level, testing these components can add substantially to the overall response rate and profitability.

The response rate to a direct-marketing campaign typically understates the long-term impact of the campaign. Suppose only2% of recipients of a directmail piece advertising Samsonite luggage place an order. A much larger percentage became aware (direct mail has high readership), and some percentage formed an intention to buy at a later date (the purchase will occur at a retail outlet). Furthermore some percentage of the audience may mention Samsonite luggage to others as a result of seeing the promotion. Some companies are now measuring the impact of direct marketing on awareness, intention to buy, and word-of-mouth to derive a larger estimate of the promotions impact than is measured by the response rate alone.

Measuring the Campaigns success:

By adding up the campaign costs, the direct marketer can figure out in advance the needed break-even response rate. This rate must be net of returned merchandise and bad debts. Returned merchandise can kill an otherwise effective campaign. The direct marketer needs to analyze the main causes of returned merchandise, such as late arrival, defective merchandise, and damage in transit, not as advertised and incorrect order fulfillment.

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DIRECT MARKETING By carefully analyzing past campaigns, direct marketers can steadily improve their performance. Even when a specific campaign fails to break even, it might still be profitable.

Suppose a membership organization spends $10,000 on a new-member campaign and attracts 100 new members, each paying $70. it appears that the campaign has lost $3,000 (=$10,000-$7,000). Bit if 80% of new members renew their membership in the second year, the organization gets another $5,600 without any effort. It has now received $12,600 (=$7,000+$5,600) for its investment of $10,000. to figure out the long-term break-even rate one needs to figure out not only the initial response rate but the percentage who renew each year and for how many years they renew.

This example introduces the concept of customer lifetime value. The ultimate value of a customer is not revealed by the customers purchase during a particular mailing. Rather the customers ultimate value is the profit made on all the customers purchases overtime less the customer acquisition and maintenance costs. For an average customer, one would calculate the average customer longevity, average customer annual expenditure, and average gross margin, properly discounted for the opportunity cost of money, les the average customers whose expected lifetime value the company wants to assess.

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DIRECT MARKETING After assessing customer lifetime values, the company can focus its communication efforts on the more attractive customers. These efforts include sending communications that may not even sell the customer anythingbut maintain the customers interest in the company and its products. Such communications include free newsletters, tips and birthday greetings, al serving to build a customer relationship.

Direct marketing has spawned a growing body of theory, measurement, and competent practice. It adds a number of communication concepts and capabilities to the marketers toolbox. When tied to a carefully developed customer database, it can increase sales and profit yields and strengthens customer relationship. It can provide more accurate prospect leads and trigger new sales at a lower cost. Ultimately, marketers will make direct marketing and database marketing an integral part of their marketing strategy and planning. Yet they must do this responsibility.

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CHANNELS OF DISTRIBUTION

Direct marketing use several channels of products to the target customers. Pioneers of direct marketing in India have successfully tried door-to-door selling. This versatile mode of distribution can be used with equal effectiveness for highvalue gadgets such as water purifiers, specialty items such as health care products, lifestyle products like perfume and cigarettes, as also for items of mass consumption such as detergent, toilet soaps and eatable. The only problem is its high costs.

Mail order delivery has its limitations. It is more suitable for books, magazines, audio and videocassettes, small gifts and specialty item such as fashion garments. Distribution through firms exclusive shops is more suitable for up-market consumer product that requires selective distribution and /or efficient after-sales services.

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PUBLIC AND ETHICAL ISSUES IN DIRECT MARKETING

Direct marketers and their customers usually enjoy mutually rewarding relationships. Occasionally, however, a darker side emerges:

Irritation:

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

Unfairness:

Some direct marketers take advantage of impulsive or less sophisticated buyers. TV shopping shows and infomercials may be the worst culprits. They feature smooth-talking hosts, elaborately staged demonstrations, claims of

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DIRECT MARKETING drastic price reductions, while they last time limitations, and unexcelled ease of purchase to capture buyers who have low sales resistance.

Deception and fraud:

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

Invasion of privacy:

It seems that almost every time consumers order products by mail or telephone, enter a sweepstakes, apply for a credit card, or take out a magazine subscription, their names, addresses, and purchasing behavior may be added to

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DIRECT MARKETING several company databases. Critics worry that marketers may know too much about consumers lives, and that they may use this knowledge to take unfair advantage. Should AT&T be allowed to sell marketers the names of consumers who frequently call catalog companies 800 numbers? Is it right for credit bureaus to compile and sell lists of people who have recently applied for credit cards? Is it right for states to sell the names and addresses of drivers license holders, along with height, weight, and gender information, allowing apparel retailers to target people with special clothing offers?

People in the direct-marketing industry are attempting to address these issues. They know that, left untended, such problems will lead to increasingly negative consumer attitudes, lower response rates, and calls for greater state and federal regulation. In the final analysis, most direct marketers want the same thing that consumers want: honest and well-designed marketing offers targeted only to those consumers who appreciate hearing about the offer.

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SOME NEWER DIMENSIONS OF DIRECT MARKETING

Some emerging trends in direct marketing are telemarketing (marketing through telephone) and electronic shopping. In India, suppliers of industrial components and materials catering firms and service organization (such as hotels and transporters) have being booking orders on telephone since long. But telemarketing in an organized for emerged only in 1990s new-concept products such as perfect ice and brands of established firms such as lakme (shie) , Cadbury (dollops) and Shaw Wallace ( single malt whisky) were the earlier practitioners of tele marketing. With the expansion of communication network this phenomena is catching up fast. Citibank has come out with tele banking in the metros.

Television marketing is a Visual version of telemarketing. The marketers buy a time-slot on television to demonstrate and describe the product, and customers can calla toll free number and order the product. Private cable TV network are also being used for television marketing

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DIRECT MARKETING Electronic shopping has two firms the videotext system permits a customer having interactive cable TV connection to order products displayed on TV screen by operating a small terminal. Alternatively, he can computer network to receive information about different products and their prices, compare various offers, choose the product and key in his product. Many firms have also started hawking their ware on the worldwide computer web Internet.

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

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DIRECT MARKETING channels have already developed large database on their customers and maintain regular contract with them through direct communication. With more and more firms realizing the value of retaining a customer, an integrated approach towards marketing will gain more currency.

THE GROWING USE OF INTEGRATED DIRECT MARKETING

Although direct and on-line marketing are booming, a large number of companies still relegate them to minor roles in their communication-promotion mix. Advertising and sales-promotion departments receive most of the communication dollars and jealously guard their budgets. The sales force may also see direct marketing as a threat when it has to turn over smaller customers and prospects to direct mailers and telemarketers. However, companies are increasingly recognizing the importance of integrating their marketing communications. Some companies are appointing a chief communications officer (CCO) in addition to a CIO (Chief Information Officer). The CCO supervises specialists in advertising, sales promotion, public relations, and direct-on-line marketing. The aim is to establish the right overall communication budget and the right allocation of funds to each communication tool. This movement has been variously called integrated marketing

communication (IMC), integrated direct marketing (IDM), and maxi marketing. How can different communication tools be integrated in campaign planning? Imagine a marketer using a single tool in a one shot effort to reach

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DIRECT MARKETING and sell a prospect. An example of a single-vehicle, single-stage campaign is a one-time mailing offering a cookware item. A single-vehicle, multiple stage campaign would involve successive mailings to the same prospect. Magazine publishers, for example, send about four renewal notices to a household before giving up. A more powerful approach is he multiple-vehicle, multiple-stage campaign. Consider the following sequence: News campaign about a new product mechanism Direct mail Out bound telemarketing Face-to-face sales call Paid ad with a response

Ongoing communication. For example, Compaq might launch a new laptop computer by first arranging new stories to stir interest. Then Compaq might place full-page ads offering a free booklet on how to buy a computer. Compaq would then mail the booklet to those who responded, along with an offer to sell the new computer at a special discount before it arrives in retail stores. Suppose 4 percent of those who receive the booklet order the computer. Compaq telemarketers then phone the 96 percent who did not buy to remind them of the offer. Suppose another 6 percent now order the computer. Those who do not place an order are offered a face-to face sales call or demonstration in a local retail store. Even if the prospect is not ready to buy, there is ongoing communication. Ernan Roman says that the use of response compression, whereby multiple media are deployed within a tightly defined time frame, increases message reach and impact. The underlying idea is to deploy a sequence of messages with

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DIRECT MARKETING precise timing intervals in the hope of generating incremental sales and profits that exceed the costs involved. Roman cities a Citicorp-campaign to market home equity loans. Instead of usually only mail plus an 800 number, Citicorp used mail plus coupon plus 800 number plus outbound telemarketing plus print advertising. Although the second campaign was more expensive, it resulted in a 15 percent increase in the number of new account compared with direct mail alone.

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CUSTOMER DATABASES AND DIRECT MARKETING

Don peppers and Martha Rogers list the main differences between mass marketing one to one marketing companies that know their individual customer customize their product, offer, message, shipment method, and payment method maximize customer appeal. Todays companies are building customer database.

A customer database is an organized collection of comprehensive data about individual customer or prospect that is current, accessible and for such marketing purposes as lead generation, lead qualification sale of a product or service, or maintenance of customer relationship. Data base marketing is the process of building, maintenances, and using customer database and other database (products, suppliers, and resellers) for the purpose of contracting and transacting.

The marketing model for integrated marketing.

Rapp and Collinss maxi marketing model consists of nine steps.

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1. Maximized targeting calls upon the marketer to define and identify the best prospects for offer. The marketer either buys mailing lists or searches the customer database for characteristic that point to high interest, ability to pay, and readiness to buy. Best customer includes those who buy with some frequency, dont return many orders, dont complain and pay on time. Mass marketers can go fishing for prospects with direct response advertising in such mass media as television, newspaper supplements, and magazine insert card.

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

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

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

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DIRECT MARKETING 5. Maximized activation means that advertising must trigger purchase or at least advance prospects to a measurably higher stage of buying readiness. Activation devices include statements such as send for information and reply coupon must be returned by September 30.

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

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

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

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

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Many companies confuse a customer mailing list with a customer database. A customer mailing list is simply a set of names, addresses and telephone numbers. A customer database contains much more information. In business marketing the customer profile contains the products and services the customer has brought; past volumes, prices, and profits; tam member names (and their age, birthday and hobbies and favorite foods); status of current contracts; an estimates of the suppliers shares of the customer business; competitive suppliers; assessment of competitive strengths and weakness in selling and servicing the account; and relevant buying practice, patterns and polices. In consumer marketing the customer database contains demographics (age, income family members birthdays) psychographics (activities, interest and opinions), past purchase, and other relevant information about an individual. For example the catalog company Fingerhut possesses some 1,400 pieces of information about each of the 30million customer database.

Database marketing is mostly frequently used by business marketers and service retailers (hotels banks and airlines) it is used less often by packaged goods retailers and consumer packaged goods companies, though some (Quaker oats, Ralston Purina and Nabisco among them) have been experimenting in this area. A well-developed customer database is a proprietary asset that can give the company a competitive edge.

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DIRECT MARKETING Armed with the information in its database, a company can achieve much more precision that it can with mass marketing segment marketing or niche marketing. The company can identify small groups of customer who receive fine tuned marketing offers and communication.

Conclusion:

Direct Marketing is an interactive mode of marketing through which the marketer reaches out to his target market at any location. Direct marketing helps companies to focus their marketing efforts, and hence to that an effect is more focused and targeted than conventional or general marketing.

Teleshopping, home shopping channels, catalogue marketing and online shopping are some of the tools that enable companies to cater to this core customer value. Therefore, database marketing is an interactive approach to marketing, using all communication tools and media vehicles to reach to the target market. Cross selling cal also be effectively managed through database marketing. This is especially true for firms operating in several

products/businesses and requiring the same database. The strengths of database marketing are its ability to be measured, testes and customized.

The future of Direct Marketing in India is dependent on factors like reaching out to non-metro/non-urban markets, enhancing credibility of the offer,

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DIRECT MARKETING wider use of debit and credit cards and the emergence of specialized database firms.

An Epilogue

Competition is an origin to Innovations and innovations germinates the seeds of a successful and prosperous dawn. Hence, Direct Marketing has

become a key for a company to endure in this competitive age.

Today, Customer is a King and their kaleidoscopic needs are enforcing the leading companies to emerge with the unique new products. Even the increase in income level has altered demand and consumption patterns of the urban consumers. The middle class people are looking for quality goods at reasonable prices.

This enunciate the significance of Direct Marketing in targeting the consumers and hammering them continuously so as to help them get acquainted with the various new products.

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BIBLIOGRAPHY REFERENCES:
1) PRINCIPLES OF MARKETING: PHILIP KOTLER GARY ARMSTRONG 2) MODERN MARKETING STRATEGY: EDWARD C. BURSK JOHN F. CHAPMAN 3) NEW PRODUCTS AND DIVERSIFICATION: PETER M. KRAUSHAR 4) MARKETING MANAGEMENT: RAJAN SAXENA

WEBLIOGRAPHY
www.yahoo.com www.google.com www.indiainfoline.com www.eurekaforbes.com

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