Direct Marketing Introducing Direct and Digital Marketing? Page 1 of 13 Topic: What is Direct Marketing? Welcome Notes: WELCOME BSBA STUDENTS!!! Get ready to be challenge… Learn something new every day by adapting the ‘New Normal’ I. INTRODUCTION: In this module you will be able to get an overview on what is direct, database and digital marketing. It aims for you to have a clear vision on its framework to remove confusion on widely misunderstood areas of direct marketing. II. OBJECTIVES: At the end of this module, you should be able to: 1. Define what is direct and digital marketing; 2. Discuss the importance of contemporary marketing and its role within the wider marketing network. III. PRELIMINARY ACTIVITIES: Before you proceed to the main lesson, test yourself in this activity. Source: https://www.b2bmarketing.net/ Direct Marketing Introducing Direct and Digital Marketing? Page 2 of 13 Give at 3 worlds that comes in your mind when you see the photo above. 1. _______________________ 2. _______________________ 3. _______________________ What do you think the message the picture conveying? _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ GREAT!!! You may now proceed to the main lesson. IV. LESSON PROPER Based on the preliminary activities, what did you notice about it? _______________________________________________________ CONGRATULATIONS! You may now proceed to the lesson. Let’s Begin! What is direct and database marketing? What is marketing? Marketing - ‘Marketing is the societal process by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products of value with others.’ What is direct marketing? Direct marketing is a way of doing marketing that encompasses both principles and practical tools across a variety of on‑ and off-line channels. The core of direct marketing is the use of a database to hold customer information on an individual level. This means marketers can treat existing customers in a different way from new prospects in order to create loyalty and profitability. Defining direct, Database and Digital Marketing Database Marketing - This is using a database to hold and analyze customer information, thereby helping create strategies for marketing. There is a big overlap with ‘direct marketing’. Direct Marketing Introducing Direct and Digital Marketing? Page 3 of 13 A customer database is the collection of data gathered from each individual. The database may contain contact information, such as the name, address, phone number and e-mail address of the person. Also the database can include past transactions and future needs. Direct Marketing - This focuses on using a database to communicate (and sometimes distribute) directly to customers so as to attract a direct response or ‘call of action’. There is a big overlap with ‘database marketing’. Digital Marketing - The use of the Internet, mobile devices, social media, search engines, and other channels to reach consumers. Much of this (but not all of it) is direct in nature. Off-line direct marketing broad principles remain steady but the techniques change. Direct Marketing System - Database, digital and direct marketing that is brought together to provide a complete, alternative method of marketing analysis, planning, implementation, and monitoring. Clearing up misconceptions in Direct Marketing Direct marketing is part of marketing communications. The discipline of direct marketing began in mail order, which is primarily a method of ‘distribution’ rather than communication. Direct marketing systems run through databases that primary roles are the collection, management and, most importantly, analysis, with an additional role as communications orchestrator. Direct marketing is called something else. You may have come across direct marketing, database marketing, CRM (customer relationship management), direct-response marketing, relationship marketing, one‑to‑one marketing, data driven marketing, loyalty marketing and interactive marketing. These are all used by direct marketing practitioners to mean much the same thing. The only way to cope with this situation is to define each term carefully before using it. Direct marketing equals direct mail. Direct marketing is a discipline within marketing – a system of marketing. Direct mail is merely one of the media, although an important one, that direct marketers use. Direct marketing equals junk mail. Junk mail is direct mail that is poorly targeted, patronizing, of low quality, or a mixture of all three. Financial services, in particular banks, credit card and insurance companies, are the main culprits – and in this age of environmental awareness these people should be called to account. But there are also plenty of well-targeted, relevant and attractive direct mail programs, which customers describe as ‘letters from the company or newsletter’! Is direct marketing based on Relationship Marketing or the Four Ps? 4 P’s - marketing mix is a variety of different factors that can influence a consumer’s decision to purchase a product or use a service Direct Marketing Introducing Direct and Digital Marketing? Page 4 of 13 Relationship marketing - a form of marketing developed from direct response marketing campaigns that emphasizes customer retention and satisfaction rather than sales transactions. 2 Philosophies: Transactional Approach (4P’s) vs Relationship Marketing Approach In answer to our original question, we can see that direct marketing draws from both philosophies while maintaining its own clear identity as an approach based on a customer database. Similarities and differences between Direct and General Marketing Similarities Both are involved in product development. Strategic approaches in both are similar, e.g. matching strengths with market opportunities. Research Methods Direct Marketing Introducing Direct and Digital Marketing? Page 5 of 13 Differences Direct marketing customers rather than products; segmenting according to the financial value of customers to you; distributing directly to bypass retail. General marketers tend to use mass media to build brands, and use sales promotions in the retail environment. Direct marketers also sometimes use some mass media when addressing new prospects, in order to get a response. They use personal media – mobile, social media, e‑mail, direct mail, telemarketing – when developing a relationship with existing customers. General marketers will usually use marketing research techniques to understand and predict their customers’ likely behavior. Direct marketers will analyze behavior using their database in order to predict the best responding people and the best offers to make. Direct marketing is often more expensive, on a per-customer basis, than general marketing. The investment in direct marketing is a way of ‘buying’ a closer relationship with the customer. The Historical Growth of Direct Marketing Social/Technical Reasons for Growth 1. The Internet. The Internet has established itself as probably the major engine of economic growth and social change worldwide. As we look back on the first ten years of the 21st century it is clear that this decade will be seen as the decade of the Internet. Much of this activity is of course direct in nature, at least in terms of communications and distribution. A lesser percentage involves the use of customer records to keep in touch. 2. Fragmentation of Society. Demographic changes to society have continued at an incredible pace. Customers want information that is personal, relevant, pertinent and timely to their particular circumstances. There has been a huge growth in lifestyle options, resulting in a more complex society. This gives direct approaches to marketing an advantage as they can differentiate to account for these differences. 3. Rapid Increase of Media. Social media sites like Facebook, Twitter, Instagram, Pinterest and LinkedIn have created large and highly targetable markets in a very short space of time. Bloggers are now generating significant audiences and in effect are becoming media owners. 4. Greater Consumer Sophistication. Consumers now demand far better service than companies were allowed to get away with in the past. Part of this is the wish to be treated according to their personal circumstances. 5. Consumers want to be in Control. Customers increasingly want the option of contacting organizations direct through multiple channels and expect their data to be accessible and up to date across all channels, leading to a big growth in devices such as free phone numbers and care lines. Direct Marketing Introducing Direct and Digital Marketing? Page 6 of 13 Why Businesses need to Adapt? 1. Ever more competition. Increase in commoditization in the market. The term "commoditize" applies to a process where products or services are relatively indistinguishable from the same offerings a competitor business provides. 2. Criticism of traditional marketing methods. Coopers and Lybrand (1993) found that marketing departments were considered by senior managers to be inefficient in their spending. 3. Interest in customer retention and loyalty. It is cheaper to sell to an existing customer than to sell to a new one 4. Continuing drop in computer processing costs. Desktop or PCs can now handle large customer data files and undertake complex calculations, selections by customer type, and so on, in seconds. We had just finished the lesson on what is Direct Marketing. Let’s move on to the next higher level of activity/es or exercise/s that demonstrates your potential skills/knowledge of what you have learned. Direct Marketing Introducing Direct and Digital Marketing? Page 7 of 13 V. ANALYSIS, APPLICATION AND EXPLORATION Name: ______________________________ Course & Section: __________________ A. Instructions. Define the following given terms. Write your answer on the space provided. 1. Direct Marketing __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ 2. Database Marketing __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ 3. Digital Marketing __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ 4. Direct Marketing System __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ B. Instructions: Why is direct marketing important? Do you think businesses should consider direct marketing? Why? Write your answer on the provided space. _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ Finally, let us summarize the lesson of what we had discussed today. Direct Marketing Introducing Direct and Digital Marketing? Page 8 of 13 VI. GENERALIZATION Name: ______________________________ Course & Section: __________________ A. Instructions: Read each situation and write your answer on the space provided. Situation 1: The managing director of a large, moving consumer goods firm said, ‘I have no need for direct marketing. Ours will always be a mass marketing industry.’ Do you think he was right? Explain your reason. Situation 2: You are the manager of a large car dealership. At present, you rely on a large pool of dealers to sell your product, but you have noticed recently that consumer opinion appears to be turning away from car dealers, who are generally mistrusted. One of your marketing team has written a paper advising you to look at setting up a ‘direct’ operation. What considerations should you take into account before making a decision? KUDOS! You have come to an end of Module 1. OOPS! Don’t forget that you have still an assignment to do. Here it is…. Direct Marketing Introducing Direct and Digital Marketing? Page 9 of 13 VII. ASSIGNMENT Name: ______________________________ Course & Section: __________________ A. Instructions: Research a company that adapted direct marketing. How did direct marketing help the company develop sustainable competitive advantage? What are the keys to success? Company Name: CONGRATULATIONS on reaching the end of this module! You may now proceed to the next module. Don’t forget to submit all the exercises, activities and portfolio on ___________________. KEEP UP THE GOOD WORK. Well Done!!!