Integrated Marketing Communication, For Second year marketing management students

Chapter Four
Personal Selling and Direct Marketing
4.1. The nature of personal selling
Personal selling, a form of person-to-person communication in which a seller attempts to assist
and/or persuade prospective buyers to purchase the company’s product or service or to act on an
idea. Unlike advertising, personal selling involves direct contact between buyer and seller, either
face-to-face or through some form of telecommunications such as telephone sales. The personal,
individualized communication in personal selling allows the seller to tailor the message to the
customer’s specific needs or situation.
Personal selling also involves more immediate and precise feedback because the impact of the
sales presentation can generally be assessed from the customer’s reactions. If the feedback is
unfavorable, the salesperson can modify the message. Personal selling efforts can also be
targeted to specific markets and customer types that are the best prospects for the company’s
product or service

Personal selling is a promotional method in which one party (e.g., salesperson) uses skills and
techniques for building personal relationships with another party (e.g., those involved in a
purchase decision) that results in both parties obtaining value.  In most cases the “value” for the
salesperson is realized through the financial rewards of the sale while the customer’s “value” is
realized from the benefits obtained by consuming the product.  However, getting a customer to
purchase a product is not always the objective of personal selling.  For instance, selling may be
used for the purpose of simply delivering information.

Because selling involves personal contact, this promotional method often occurs through face-to-
face meetings or via a telephone conversation, though newer technologies allow contact to take
place over the Internet including using video conferencing or text messaging (e.g., online chat)
The goal of all marketing efforts is to achieve the organization's objectives by offering want-
satisfaction to the market over the long run.
How well an organization manages its sales force often has a direct bearing on the success of its
entire marketing program. Personal selling is simply when the salesperson tries to sale a product
both in and outdoor. Someone in the shop is doing personal selling when he/she tries to sell a

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good. Of course, the efforts of personal sellers go far beyond simply making transactions. In
trying to close a sale or make that transaction, they also perform:
 Explaining product benefits.
 Demonstrating the proper operation of products.
 Answering questions and responding to objections.
 Organizing and implementing point-of-purchase promotions.
 Arranging the terms of sales.
 Following up the sale to ensure that the buyer is satisfied.
 Collecting market and competitive information to improve marketing strategy.

Advantages Personal selling

Compared to the other impersonal promotion tools, personal selling has the advantages of:

 Greater flexibility, i.e. Sales people can tailor sales presentations to fit the needs
and behavior of individual customers.
 Personal selling can usually be focused on prospective customers, thus
minimizing wasted effort.
 In most instances the other benefit of personal selling is that it results in the actual
sales i.e., the persuasion power of personal selling is by far larger than that of the
other promotional tools.

Disadvantages of personal selling

 The major limitation of personal selling is its high cost, i.e. the costs of operating
a sales force are high. Particularly, when the target market is large, personal
selling is difficult to apply.
 Companies often are unable to attract the caliber of people needed to do the job
of a salesperson well.
 Labor intensive
 Expensive
 Can only reach a limited number of customers

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The Role of the Sales Force

Salesperson
An individual representing a company to customers by performing one or more of the following
activities: prospecting, communicating, selling, servicing, information gathering, and
relationship building.
Salespeople can probe customers to learn more about their problems and then adjust the
marketing offer and presentation to fit the special needs of each customer.
The role of personal selling varies from company to company. Some firms have no salespeople
at all—for example, companies that sell only online or through catalogs, or companies that sell
through manufacturer’s reps, sales agents, or brokers. In most firms, however, the sales force
plays a major role. In companies that sell business products and services, such as IBM, DuPont,
or Boeing, salespeople work directly with customers. In consumer product companies such as
P&G and Nike, the sales force plays an important behind-the scenes role. It works with
wholesalers and retailers to gain their support and help them be more effective in selling the
company’s products.
1. Linking the Company with Its Customers
The sales force serves as a critical link between a company and its customers. In many cases,
salespeople serve two masters: the seller and the buyer. First, they represent the company to
customers. They find and develop new customers and communicate information about the
company’s products and services. They sell products by approaching customers, presenting their
offerings, answering objections, negotiating prices and terms, and closing sales. In addition,
salespeople provide customer service and carry out market research and intelligence work
2. Coordinating Marketing and Sales
Ideally, the sales force and other marketing functions (marketing planners, brand managers, and
researchers) should work together closely to jointly create value for customers. Unfortunately,
however, some companies still treat sales and marketing as separate functions. When this
happens, the separate sales and marketing groups may not get along well. When things go wrong,
marketers blame the sales force for its poor execution of what they see as an otherwise splendid
strategy. In turn, the sales team blames the marketers for being out of touch with what’s really
going on with customers. Neither group fully values the other’s contributions. If not repaired,
such disconnects between marketing and sales can damage customer relationships and company

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performance. A company can take several actions to help bring its marketing and sales functions
closer together. At the most basic level, it can increase communications between the two groups
by arranging joint meetings and spelling out communications channels. It can create
opportunities for salespeople and marketers to work together. Brand managers and researchers
can occasionally tag along on sales calls or sit in on sales planning sessions. In turn, salespeople
can sit in on marketing planning sessions and share their firsthand customer knowledge. A
company can also create joint objectives and reward systems for sales and marketing teams or
appoint marketing-sales liaisons—people from marketing who “live with the sales force” and
help coordinate marketing and sales force programs and efforts. Finally, it can appoint a high-
level marketing executive to oversee both marketing and sales. Such a person can help infuse
marketing and sales with the common goal of creating value for customers to capture value in
return.
Managing the Sales Force (Major Steps in Sales Force Management)
We define sales force management as analyzing, planning, implementing, and controlling sales
force activities.
It includes designing sales force strategy and structure and recruiting, selecting, training,
compensating, supervising, and evaluating the firm’s sales people. These major sales force
management decisions are shown in the following Figure and are discussed in the following
sections.

1. Designing the Sales Force Strategy and Structure

Marketing managers face several sales force strategy and design questions.
 How should salespeople and their tasks be structured?
 How big should the sales force be?
 Should salespeople sell alone or work in teams with other people in the company?
 Should they sell in the field, by telephone, or on the Web?

A. The Sales Force Structure

A company can divide sales responsibilities along any of several lines. The structure decision is
simple if the company sells only one product line to one industry with customers in many
locations. In that case the company would use a territorial sales force structure.

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However, if the company sells many products to many types of customers, it might need a
product sales force structure, a customer sales force structure, or a combination of the two.

I. Territorial Sales Force Structure. In the territorial sales force structure, each salesperson
is assigned to an exclusive geographic area and sells the company’s full line of products or
services to all customers in that territory.
This organization clearly defines each salesperson’s job and fixes accountability. It also
increases the salesperson’s desire to build local customer relationships that, in turn, improve
selling effectiveness. Finally, because each salesperson travels within a limited geographic
area, travel expenses are relatively small.

II. Product Sales Force Structure: A sales force organization in which salespeople specialize
in selling only a portion of the company’s products or lines.
Salespeople must know their products, especially when the products are numerous and
complex. This need, together with the growth of product management, has led many
companies to adopt a product sales force structure, in which the sales force sells along
product lines. For example, GE employs different sales forces within different product and
service divisions of its major businesses. Within GE Infrastructure, for instance, the company
has separate sales forces for aviation, energy, transportation, and water processing products
and technologies. Within GE Healthcare, it employs different sales forces for diagnostic
imaging, life sciences, and integrated IT products and services.
In all, a company as large and complex as GE might have dozens of separate sales forces
serving its diverse product and service portfolio.

III. Customer Sales Force Structure. A sales force organization in which salespeople specialize
in selling only to certain customers or industries.
More and more companies are now using a customer (or market) sales force structure, in
which they organize the sales force along customer or industry lines.
Separate sales forces may be set up for different industries, serving current customers versus
finding new ones, and serving major accounts versus regular accounts. Many companies even
have special sales forces to handle the needs of individual large customers.

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Organizing the sales force around customers can help a company build closer relationships
with important customers
IV. Complex Sales Force Structures. When a company sells a wide variety of products to many
types of customers over a broad geographic area, it often combines several types of sales
force structures. Salespeople can be specialized by customer and territory; product and
territory; product and customer; or territory, product, and customer. For example, Stanley
Black & Decker specializes its sales force by customer (with different sales forces calling on
Home Depot, Lowe’s, and smaller independent retailers) and by territory for each key
customer group (territory representatives, territory managers, regional managers, and so on).
No single structure is best for all companies and situations. Each company should select a
sales force structure that best serves the needs of its customers and fits its overall marketing
strategy

Sales Force Size

Once the company has set its structure, it is ready to consider sales force size. Sales forces may
range in size from only a few salespeople to tens of thousands. Some sales forces are huge—for
example, PepsiCo employs 36,000 salespeople; American Express, 23,400; GE, 16,400; and
Xerox, 15,000.
Salespeople constitute one of the company’s most productive—and most expensive—assets.
Therefore, increasing their numbers will increase both sales and costs. Many companies use
some form of workload approach to set sales force size. Using this approach, a company first
groups accounts into different classes according to size, account status, or other factors related to
the amount of effort required to maintain the account. It then determines the number
ofsalespeople needed to call on each class of accounts the desired number of times.
2. Recruiting and Selecting Salespeople
At the heart of any successful sales force operation is the recruitment and selection of good
salespeople. The performance difference between an average salesperson and a top salesperson
can be substantial.. Thus, careful salesperson selection can greatly increase overall sales force
performance. Beyond the differences in sales performance, poor selection results in costly
turnover. When a salesperson quits, the costs of finding and training a new salesperson—plus the
costs of lost sales—can be very high.

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When recruiting, a company should analyze the sales job itself and the characteristics of its most
successful salespeople to identify the traits needed by a successful salesperson in their industry.
Then it must recruit the right salespeople. The human resources department looks for applicants
by getting names from current salespeople, using employment agencies, searching the Web,
placing classified ads, and working through college placement services. Another source is to
attract top salespeople from other companies. Recruiting will attract many applicants from which
the company must select the best. The selection procedure can vary from a single informal
interview to lengthy testing and interviewing. Many companies give formal tests to sales
applicants. Tests typically measure sales aptitude, analytical and organizational skills, personality
traits, and other characteristics. But test scores provide only one piece of information in a set that
includes personal characteristics, references, past employment history, and interviewer reactions.
3. Training Salespeople
New salespeople may spend anywhere from a few weeks or months to a year or more in training.
Then, most companies provide continuing sales training via seminars, sales meetings, and Web
e-learning throughout the salesperson’s career. Know a day companies spend billions of dollars
annually on training salespeople, and sales training typically captures the largest share of the
training budget. Although training can be expensive, it can also yield dramatic returns.
Training programs have several goals.
 First, salespeople need to know about customers and how to build relationships with
them. So the training program must teach them about different types of customers and
their needs, buying motives, and buying habits.
 It must also teach them how to sell effectively and train them in the basics of the selling
process.
 Salespeople also need to know and identify with the company, its products, and its
competitors. So an effective training program teaches them about the company’s
objectives, organization, products, and the strategies of major competitors.
Today, many companies are adding e-learning to their sales training programs. Online training
may range from simple text-based product training and Internet-based sales exercises.

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Importance of online training

 Build sales skills to sophisticated simulations that re-create the dynamics of real-life sales
calls.
 Training online instead of on-site can cut travel and other training costs, and it takes up
less of a salesperson’s selling time.
 It also makes on-demand training available to salespeople, letting them train as little or as
much as needed, whenever and wherever needed
Many companies are now using imaginative and sophisticated e-learning techniques tomake
sales training more efficient—and sometimes even more fun.
4. Compensating Salespeople
To attract good salespeople, a company must have an appealing compensation plan.
Compensation consists of four elements:
 a fixed amount,
 a variable amount,
 Expenses, and fringe benefits.
A. The fixed amount, usually a salary, gives the salesperson some stable income.
B. The variable amount, which might be commissions or bonuses based on sales performance,
rewards the salesperson for greater effort and success.
Management must determine what mix of these compensation elements makes the most sense for
each sales job.
Different combinations of fixed and variable compensation give rise to four basic types of
compensation plans: straight salary, straight commission, salary plus bonus, and salary plus
commission.
A sales force compensation plan can both motivate salespeople and direct their activities.
Compensation should direct salespeople toward activities that are consistent with overall
sales force and marketing objectives. For example, if the strategy is to acquire new business,
grow rapidly, and gain market share, the compensation plan might include a larger
commission component, coupled with a new-account bonus to encourage high sales
performance and new account development. In contrast, if the goal is to maximize current
account profitability, the compensation plan might contain a larger base-salary component
with additional incentives for current account sales or customer satisfaction.

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In fact, more and more companies are moving away from high commission plans that may
drive salespeople to make short-term grabs for business. They worry that a salesperson who
is pushing too hard to close a deal may ruin the customer relationship. Instead, companies are
designing compensation plans that reward salespeople for building customer relationships
and growing the long-run value of each customer.
5. Supervising and Motivating Salespeople
New salespeople need more than a territory, compensation, and training—they need supervision
and motivation. The goal of supervision is to help salespeople “work smart” by doing the right
things in the right ways. The goal of motivation is to encourage salespeople to “work hard” and
energetically toward sales force goals. If salespeople work smart and work hard, they will realize
their full potential—to their own and the company’s benefit.
I. Supervising Salespeople
Companies vary in how closely they supervise their salespeople. Many help sales people identify
target customers and set call objectives. Some may also specify how much time the sales force
should spend prospecting for new accounts and set other time management priorities. One tool is
the weekly, monthly, or annual call plan that shows which customers and prospects to call on
and which activities to carry out. Another tool is time-and-duty analysis. In addition to time
spent selling, the salesperson spends time traveling, waiting, taking breaks, and doing
administrative chores.
II. Motivating Salespeople
Beyond directing salespeople, sales managers must also motivate them. Some sales people will
do their best without any special urging from management. To them, selling may be the most
fascinating job in the world. But selling can also be frustrating. Salespeople often work alone,
and they must sometimes travel away from home. They may face aggressive competing
salespeople and difficult customers. Therefore, salespeople often need special encouragement to
do their best. Management can boost sales force morale and performance through its
organizational climate, sales quotas, and positive incentives.
Organizational climate describes the feeling that salespeople have about their opportunities,
value, and rewards for a good performance. Some companies treat salespeople as if they are not
very important, so performance suffers accordingly. Other companies treat their salespeople as

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valued contributors and allow virtually unlimited opportunity for income and promotion. Not
surprisingly, these companies enjoy higher sales force performance and less turnover.
Many companies motivate their salespeople by setting sales quotas—standards stating the
amount they should sell and how sales should be divided among the company’s products.
Compensation is often related to how well salespeople meet their quotas.
Companies also use various positive incentives to increase the sales force effort. Sales meetings
provide social occasions, breaks from the routine, chances to meet and talk with “company
brass,” and opportunities to air feelings and identify with a larger group. Companies also sponsor
sales contests to spur the sales force to make a selling effort above and beyond what is normally
expected. Other incentives include honors, merchandise and cash awards, trips, and profit-
sharing plans
6. Evaluating Salespeople and Sales Force Performance
We have thus far described how management communicates what salespeople should be doing and
how it motivates them to do it. This process requires good feedback. And good feedback means
getting regular information about salespeople to evaluate their performance. Management gets
information about its salespeople in several ways. The most important source is sales reports,
including weekly or monthly work plans and longer-term territory marketing plans. Salespeople
also write up their completed activities on call reports and turn in expense reports for which they
are partly or wholly reimbursed. The company can also monitor the sales and profit performance
data in the salesperson’s territory. Additional information comes from personal observation,
customer surveys, and talks with other sales people. Using various sales force reports and other
information, sales management evaluates the members of the sales force. It evaluates salespeople
on their ability to “plan their work and work their plan.” Formal evaluation forces management to
develop and communicate clear standards for judging performance. It also provides salespeople
with constructive feedback and motivates them to perform well. On a broader level, management
should evaluate the performance of the sales force as a whole. Is the sales force accomplishing its
customer relationship, sales, and profit objectives? Is it working well with other areas of the
marketing and company organization? Are sales force costs in line with outcomes? As with other
marketing activities, the company wants to measure its return on sales investment.

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The Personal Selling Process

So far, we’ve examined how sales management develops and implements overall sales force
strategies and programs. In this section, we’ll look at how individual salespeople and sales teams
sell to customers and build relationships with them.
The selling process consists of several steps that salespeople must master. These steps focus on
the goal of getting new customers and obtaining orders from them. However, most salespeople
spend much of their time maintaining existing accounts and building long-term customer
relationships. We discuss the relationship aspect of the personal selling process in a later section.
Steps in the Selling Process
The selling process consists of seven steps: prospecting and qualifying, pre-approach, approach,
presentation and demonstration, handling objections, closing, and follow-up.
A. Prospecting and Qualifying
The first step in the selling process is prospecting—identifying qualified potential customers.
Approaching the right potential customers is crucial to the selling success. The company must train
salespeople to actively scout the right prospects. Although the company supplies some leads,
salespeople need skill in finding their own. The best source is referrals. Salespeople can ask
current customers for referrals and cultivate other referral sources, such as suppliers, dealers,
noncompeting salespeople, and Web or other social networks. They can also search for prospects
in directories or on the Web and track down leads using telephone and e-mail.
B. Pre-approach
A salesperson or company identifies qualified potential customers. Before calling on a prospect,
the salesperson should learn as much as possible about the organization (what it needs, who is
involved in the buying) and its buyers (their characteristics and buying styles). This step is
known as pre-approach.” Pre-approach begins with good research. The sales person can consult
standard industry and online sources, acquaintances, and others to learn about the company.
Then the salesperson must apply the research to develop a customer strategy.

C. Approach
A salesperson meets the customer for the first time. During the approach step, the salesperson
should know how to meet and greet the buyer and get the relationship off to a good start. This step
involves the sales person’s appearance, opening lines, and follow-up remarks. The opening lines

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should be positive to build goodwill from the outset. This opening might be followed by some key
questions to learn more about the customer’s needs or by showing a display or sample to attract the
buyer’s attention and curiosity. As in all stages of the selling process, listening to the customer is
crucial.
D. Presentation and Demonstration
During the presentation step of the selling process, the salesperson tells the “value story” to the
buyer, showing how the company’s offer solves the customer’s problems. “Stop selling and start
helping,” advises one sales consultant. “Your goal should be to sell your customers exactly what
will benefit those most, ”says another. Buyer’s today want answers, not smiles. Moreover, they
don’t want just products. More than ever in today’s economic climate, buyers want to know how
those products will add value to their businesses. They want salespeople who listen to their
concerns, understand their needs, and respond with the right products and services. The qualities
that buyers dislike most in sales people include being pushy, late, deceitful, unprepared,
disorganized, or overly talkative. The qualities they value most include good listening, empathy,
honesty, dependability, thoroughness, and follow-through.
Thus, today’s salespeople are employing advanced presentation technologies that allow for full
multimedia presentations to only one or a few people. The venerable old flipchart has been
replaced with sophisticated presentation software, online presentation technologies, interactive
whiteboards, and handheld computers and projectors.

E. Handling Objections
Customers almost always have objections during the presentation or when asked to place an
order. The problem can be either logical or psychological, and objections are often unspoken. In
handling objections, the salesperson should use a positive approach, seek out hidden
objections, ask the buyer to clarify any objections, take objections as opportunities to provide
more information, and turn the objections into reasons for buying. Every salesperson needs
training in the skills of handling objections.
F. Closing
A salesperson seeks out, clarifies, and overcomes any customer objections to buying. After
handling the prospect’s objections, the salesperson now tries to close the sale. Some salespeople
do not get around to closing or handle it well. They may lack confidence, feel guilty about

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asking for the order, or fail to recognize the right moment to close the sale. Salespeople should
know how to recognize closing signals from the buyer, including physical actions, comments,
and questions. For example, the customer might sit forward and nod approvingly or ask about
prices and credit terms. Salespeople can use one of several closing techniques. They can ask for
the order, review points of agreement, and offer to help write up the order, ask whether the
buyer wants this model or that one, or note that the buyer will lose out if the order is not placed
now. The salesperson may offer the buyer special reasons to close, such as a lower price or an
extra quantity at no charge.

G. Follow-Up
A salesperson follows up after the sale to ensure customer satisfaction and repeat business. The
last step in the selling process—follow-up—is necessary if the salesperson wants to ensure
customer satisfaction and repeat business. Right after closing, the salesperson should complete
any details on delivery time, purchase terms, and other matters. The salesperson then should
schedule a follow-up call after the buyer receives the initial order to make sure proper
installation, instruction, and servicing occur. This visit would reveal any problems, assure the
buyer of the salesperson’s interest, and reduce any buyer concerns that might have arisen since
the sale.

IV.2. DIRCT MARKETING

As marketers continue to explore options for delivering their messages, the media landscape is
itself changing. The addition of new options like the Internet and interactive media is one change
that has occurred. Another is the variety of innovations taking place in regard to existing media
and the companies using them. Earlier in this text we discussed the changing role of support
media such as product placements and movie theater advertising. The examples in this chapter's
lead-in demonstrate one of the changes occurring in the direct-marketing area, specifically in
regard to infomercials. But it is important to realize that the infomercial is only one of the tools
used by direct marketers. While most companies continue to rely primarily on the other
promotional mix elements to move their products and services through intermediaries, an
increasing number are going directly to the consumer. These companies believe that while the

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traditional promotional mix tools such as advertising, sales promotion, and personal selling are
effective in creating brand image, conveying information, and/or creating awareness, going
direct with these same tools can generate an immediate behavioral response. Direct marketing is
a valuable tool in the integrated communications program, though it seeks somewhat different
objectives.

Defining Direct Marketing: Direct marketing is a system of marketing by which organizations

communicate directly with target customers to generate a response or transaction. This response
may take the form of an inquiry, a purchase, or even a vote. First we must distinguish between
direct marketing and direct-marketing media. Direct marketing is an aspect of total marketing—
that is, it involves marketing research, segmentation, evaluation, and the like. Direct marketing
uses a set of direct-response media, including direct mail, telemarketing, interactive TV, print,
the Internet, and other media. These media are the tools by which direct marketers implement the
communications process.

The Growth of Direct Marketing

Direct marketing has been around since the invention of the printing press in the 15th century.
The major impetus behind the growth of direct marketing may have been the development and
expansion of the U.S. Postal Service, which made catalogs available to both urban and rural
dwellers. Catalogs revolutionized America's buying habits; consumers could now shop without
ever leaving their homes. But catalogs alone do not account for the rapid growth of direct
marketing. A number of factors in American society have led to the increased attractiveness of
this medium for both buyer and seller.

There are factors which contribute to the rapid growth of direct marketing

1. Consumer credit cards

2. Direct-marketing syndicates. Companies specializing in list development, statement inserts,
catalogs, and sweepstakes have opened many new opportunities to marketers. The number
of these companies continues to expand, creating even more new users.
3. The changing structure of society and the market. One of the major factors contributing to
the success of direct marketing is that so many consumers are now "money rich and time-
poor." The rapid increase in dual-income families has meant more income. At the same

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time, the increased popularity of physical fitness, do-it-yourself crafts and repairs, and home
entertainment have reduced the time available for shopping and have increased the
attractiveness of direct purchases.
4. Technological advances. The rapid technological advancement of the electronic media and
of computers has made it easier for consumers to shop and for marketers to be successful in
reaching the desired target markets.
Direct Marketing tools

1. Direct mail: It is the most heavily used direct marketing medium and the one most direct
marketers learn first. Direct mail has been used to sell a wide variety of goods and services to
consumers as well as businesses, and it continues to grow despite postage increases.
Direct mail offers several advantages over other media, including

 Selectivity, personalization, flexibility, and testability.

 It allows businesses to target individuals with known purchase histories or particular
psychographic or demographic characteristics that match the marketer's customer profile.
 It can be targeted to a specific geographic area based on zip codes or other geographic
factors.
 Personalization in direct mail means not only addressing the envelope to a person or family
by name, but also perhaps including the recipient's name inside the envelope.
 Direct mail packages come in all shapes and sizes, making it one of the most flexible of the
direct marketing media.
 A standard direct mail package includes an envelope, a letter, a brochure, and a response
device.
 The envelope's job is to motivate the recipient to open the package. Regardless of the
volume of mail a person receives, the envelope must distinguish itself from other mail by its
size, appearance, and any copy that might be written on it.
 The letter is a sales letter and provides the opportunity to directly address the interests and
concerns of the recipient. The letter typically spells out the benefits of the offer in detail.
While the letter tells the recipient about the benefits of the offer, the brochure illustrates
them. Illustrated brochures are used to sell services as well as products. Finally, the package
must include a response device, such as a business reply card, that the recipient can send

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back. Response rates are generally higher when the response device is separate from, rather
than part of, the brochure or letter. Toll-free numbers are often prominently displayed to
allow the recipient to respond via telephone.
 Direct mail is the most easily tested advertising medium. Every factor in successful direct
marketing—the right offer, the right person, the right format, and the right timing—can be
tested in direct mail. Computer technologies have made it easier to select a randomized name
sample from any list, so that mailers can run a test mailing to determine the response from a
list before "rolling out," or mailing, the entire list. Different packages containing different
offers can also be tested. Other media allow some degree of testing, but direct mail is the
most sophisticated. In relation to the other direct marketing media, direct mail is considered
to offer the most cost-effective way of achieving the highest possible response.
Telemarketing usually produces a higher response rate, but at a much higher cost per
response.
2. Telemarketing: The second most common form of direct marketing is telemarketing, in
which marketers contact consumers by phone. The use of the telephone in direct marketing
has grown dramatically over the past two decades. Expenditures now may equal, or even
surpass, those of direct mail. Telephone based direct marketing may be outbound and/or
inbound.
1. Inbound telemarketing is also known as tele servicing and usually involves taking orders and
responding to inquiries.
2. Outbound telemarketing for consumers may be used for one-step selling, lead generation,
lead qualification or follow-up, and selling and servicing larger and more active customers.
In business, telemarketing can be used to reach smaller accounts that do not warrant a
personal sales call as well as to generate, qualify, and follow up leads.

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Advantages of Telemarketing

 Being personal and interactive.

 It is an effective two way communications medium that enables company representatives
to listen to customers.
 Telephone salespeople typically work from a script, but the medium allows the flexibility
of revising the script as needed.
 It also allows for up-and cross-selling. While customers are on the phone it is possible to
increase the size of their orders by offering them additional choices—something that
tends to lead to confusion in other direct marketing media.
Disadvantages of Telemarketing.
 It is more expensive than direct mail.
 It also lacks a permanent response device that the prospect can set aside or use later. It is
not a visual medium—though the technology to make it one may soon be available.
 Finally, it is perceived as intrusive, generating consumer complaints that have led to
legislative actions to regulate the telemarketing industry.
3. E-mail 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. It is also known as
viral marketing because of its wide reach.
4. Voice-Mail Marketing: 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 (an application where prerecorded 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.
5. 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

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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.
6. 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.
7. Television and Other Direct-response marketing: Magazine: Direct response print ads in
magazines must make a definite offer or request that asks the reader to do something.
Typically, such ads require a reader to send in a coupon or reply card, or call a toll-free
number. With well over 2,000 consumer magazines now being published, magazine ads
allow direct marketers to reach audiences with identifiable interests. In addition to
advertising heavily in special interest magazines, direct marketers utilize mass consumer
magazines and take advantage of regional advertising space to target specific audiences.
Unlike general advertisers, who measure the effectiveness of their print ads in terms of reach
and frequency, direct marketers measure the effectiveness of their print ads in terms of cost
effectiveness—either cost-per-inquiry or cost-per-order. Magazine ads offer the advantages
of good color reproduction, a relatively long ad life (especially compared to daily
newspapers), and a lower cost. Creative costs for magazine ads are also usually lower than
for direct mail. But direct marketers find magazines' long lead times, slower response, and
scarcer space than direct mail to be disadvantages.
8. News Papers: While direct marketers advertise in magazines more than newspapers,
newspapers have some distinct advantages. These include the variety of sections offered
within a newspaper, shorter closing dates, an immediate response, and broad coverage of a
large and diverse audience. Disadvantages include poor ad reproduction and the limited
availability of color. Editorial content can also have more of an adverse effect on ad response
than in magazines. In addition to advertising in the regular pages of a newspaper, direct
marketers also advertise in free-standing inserts (FSIs) that are usually distributed with the
Sunday editions of newspapers.
9. Direct response television marketing

Direct marketing on TV (commonly referred to as DRTV) has two basic forms: long form
(usually half-hour or hour-long segments that explain a product in detail and are commonly

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referred to as infomercials) and short form which refers to typical 0:30 second or 0:60 second
commercials that ask viewers for an immediate response (typically to call a phone number on
screen or go to a website).
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.
10. Kiosk Marketing: Some companies design “customer-order-placing machines” called kiosks
(in contrast to vending machines, which dispense actual products) and placed them in stores,
airports and other locations.

Direct-Marketing Objectives
The direct marketer usually seeks a direct response. The objectives of the program are normally
behaviors—for example, test drives votes, contributions, and/or sales. A typical objective is
defined through a set response, perhaps a 2 to 3 percent response rate. Not all direct marketing
seeks a behavioral response, however. Many organizations use direct marketing to build an
image, maintain customer satisfaction, and inform and/or educate customers in an attempt to lead
to future actions.

The database in direct marketing

A database is at the heart of a direct marketing operation. Before discussing the database in
direct marketing, however, something should be pointed out. Not all uses of a database in
marketing constitute direct marketing. In fact, in its broader application, use of databases in
marketing is often referred to as ‘database marketing’. One growing use of database marketing is
in the retail area.. But not all database marketing is direct marketing. And a database is not just
another name for a mailing list. A mailing (or telephone) list is indeed essential to a database, but
a database is much more. One definition of a database describes it as ‘a shared collection of
interrelated data designed to meet the varied information needs of an organization. This data will
generally combine the names of customers and prospects (including how to contact them) along
with particulars about their buying or usage behaviour and other information. Obviously this can
be a powerful tool in isolating very specific target groups. The most effective use of a database is

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when it is a closed-loop system, according to Robert Kestinbaum (1994) when head of a large
direct marketing company. In his words, one knows ‘who has been contacted at what time, and at
what cost’, and by looking at the costs, evaluate the results. This ensures accountability. It also
permits updating and re-evaluating the database.

Building a database

The steps that go into building and maintaining a database are.

1. The first step is to develop a list. This can be done in any number of ways. If there is no
customer list, the first step is to develop one. Regardless, managers should comb through all
available marketing data; it may be surprising what is already on hand. Sales forces keep
records, there may be warranty cards, charge records, etc. If there is time, one could survey
the market. A quick start is possible by simply renting or buying a list that corresponds to the
target market.
2. But having a list is not enough, it must analyzed. What information does it contain? Should
the entire list be used? What does the list imply about the type of offer or means of response?
Who are customers, whom prospects?
3. Once the content of a database is understood, it is time to use it to implement a direct
marketing program.
4. Once the program has run, 3 the results must be analyzed. It is not enough to simply use a
database as a source for contacting customers or prospects. One must study the effectiveness
of the list. Is there any information in the database that explains why some people may or
may not have responded to the message? Developing and using a list does not make a
database. One must constantly update all of the information. Keep track of who does, and
who does not respond, to what type of messages; what are the purchase rates and patterns. In
effect, retain and track the details of every direct marketing program and the response. In a
very real sense one is always building a database.
Importance of Database

This database is a tool for database marketing—the use of specific information about individual
customers and/or prospects to implement more effective and efficient marketing
communications."

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Integrated Marketing Communication, For Second year marketing management students

Marketing databases enable marketers to

 Target, segment, and grade customers

 Store key customer information
 Record customer & channel transactions
 Measure efficiency of direct-response ads

Advantages and Disadvantages of Direct Marketing

Many of the advantages of direct marketing have already been presented. A review of these and
some additions follow:

1. Selective reach. Direct marketing lets the advertiser reach a large number of people and
reduces or eliminates waste coverage. Intensive coverage may be obtained through broadcast
advertising or through the mail. While not everyone drives on highways where there are
billboards or pays attention to TV commercials, virtually everyone receives mail. A good list
allows for minimal waste, as only those consumers with the highest potential are targeted. For
example, a political candidate can direct a message at a very select group of people (those living
in a certain Zip code or members of the Sierra Club, say); a music club can target recent
purchasers of CD players.

2. Segmentation capabilities. Marketers can purchase lists of recent product purchasers, car
buyers, bank-card holders, and so on. These lists may allow segmentation on the basis of
geographic area, occupation, demographics, and job title, to mention a few.

3. Frequency. Depending on the medium used, it may be possible to build frequency levels. The
program vehicles used for direct-response TV advertising are usually the most inexpensive
available, so the marketer can afford to purchase repeat times. Frequency may not be so easily
accomplished through the mail, since consumers may be annoyed to receive the same mail
repeatedly.

4. Flexibility. Direct marketing can take on a variety of creative forms. For example, the
Discovery Network sent 17-inch TV sets to media buyers through the mail. The only message
accompanying the TV sets was one on the cord that said "Plug me in" and another on a videotape

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that read "Play me." Upon doing so, the recipient was greeted with a seven-minute promotional
video. Direct-mail pieces also allow for detailed copy that provides a great deal of information.
The targeted mailing of videotapes containing product information has increased dramatically, as
companies have found this a very effective way to provide potential buyers with product
information.

5. Timing. While many media require long-range planning and have long closing dates, direct-
response advertising can be much more timely. Direct mail, for example, can be put together
very quickly and distributed to the target population. TV programs typically used for direct-
response advertising are older, less sought programs that are likely to appear on the station's list
of available spots. Another common strategy is to purchase available time at the last possible
moment to get the best price.

6. Personalization. No other advertising medium can personalize the message as well as direct
media. Parents with children at different age levels can be approached, with their child's name
included in the appeal. Car owners are mailed letters congratulating them on their new purchase
and offering accessories. Computer purchasers are sent software solicitations. Graduating college
students receive very personalized information that recognizes their specific needs and offers
solutions (such as credit cards).

7. Costs. While the Cost per thousand impressions (technically, “cost per mille”(CPM) for
direct mail may be very high on an absolute and a relative basis, its ability to specifically target
the audience and eliminate waste coverage reduces the actual CPM. The ads used on TV are
often among the lowest-priced available, and a video can be delivered for less than $1 (including
postage). A second factor contributing to the cost effectiveness of direct-response advertising is
the cost per customer purchasing. Because of the low cost of media, each sale generated is very
inexpensive.

8. Measures of effectiveness. No other medium can measure the effectiveness of its advertising
efforts as well as direct response. Feedback is often immediate and always accurate.

Disadvantages of direct marketing include the following:

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

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being solicited. Even some senders of direct mail, including Motorola, GM, and Air Products &
Chemicals, say they throw out most of the junk mail they receive. This problem is particularly
relevant given the increased volume of mail being sent. (One study estimates the typical
American receives 14 pieces of junk mail per week.)39 Another predicts that by 2007 consumers
will receive over 3,900 junk e-mails per year.40 In 2002 over 205.7 billion pieces of mail were
sent in the United States alone. Likewise, direct-response ads on TV are often low-budget ads for
lower-priced products, which contribute to the image that something less than the best products
are marketed in this way. (Some of this image is being overcome by the home shopping
channels, which promote some very expensive products.) Telemarketing is found to be irritating
to many consumers, as is "spam" or Internet junk mail. As you can see in Ethical Perspective 14-
2, other factors have also created image problems for the direct-marketing industry.

2. Accuracy. One of the advantages cited for direct mail and telemarketing was targeting
potential customers specifically. But the effectiveness of these methods depends on the accuracy
of the lists used. People move, change occupations, and so) n, and if the lists are not kept current,
selectivity will decrease. Computerization has greatly improved the currency of lists and reduced
the incidence of bad names; however, the ability to generate lists is becoming a problem.

3. Content support. In direct-response advertising, mood creation is limited to the surrounding

program and/or editorial content. Direct mail and online services are likely to create a desirable
mood.

4. Rising costs. As postal rates increase, direct-mail profits are immediately and directly
impacted

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