1. Direct communication gaining importance over indirect communication
2009
Direct
communication
gaining importance
over indirect
communication
Assignment Marketing
Management MBA Attow
Sanil Subhash Chandra Bose
Date: 27/11/2009
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2. Direct communication gaining importance over indirect communication
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Table of contents
Topics Pages
Executive summary 3
Mass media marketing 2–4
Direct marketing 4–9
Changing behaviour of consumer attitudes and marketing 9 – 12
Key challenges for direct marketing 12 – 13
Comparison of direct and indirect marketing 13 – 15
Conclusion 15
References 15 – 16
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Executive Summary
Marketing in an organizational context is the process of informing customers about
the products or values that organization provides. It is a unified process through
which organization create values to the customers and create a strong customer
relationship in order to capture attention and values from customers in return. The
roles of marketing communications are the means which convey the message to
the customers directly or indirectly. The organization would be very careful
spreading the message to the consumers. If the message is not constructed
properly, it will be a total disaster of companies brand image which in-turn affects
shareholders value.
In the modern world of competition it is essential that the marketing communication
should outspread the right distinctive features of the product in order to win over the
competitor. Once the message has been propagated it is necessary to capture the
market response from the consumer, thus marketing communication is a to and fro
process between organization and the consumers. This means that the organization
is the sender of the message and receiver of the market response. The market
responses can be collected from customers using market research and market
information systems. Throughout the document we indent to cover the fact that
mass marketing is declining its popularity instead direct marketing getting popularity
among companies which also benefits the customers.
Mass media marketing
In the past decades, technology improvement in digital-communication made
significant changes in the traditional advertising medium like newspaper, TV, Radio,
magazines, movies, sponsoring events etc.
TV as mass medium
Advertisement revenue contributes to the growth of major television channels. TV is
the most effective tool for mass marketing and brand building. TV will allow
marketers to address big audience in seconds. Some of the major disadvantages of
TV are as below.
• As number of channels increases more fragmentation in the customer base.
• Some of the threats to TV as a mass medium are DVR, TiVO, Sky+, Astro max
which gave user an option to skip ads and watch their favourite programs.
• More than 50% of the TV viewers multitask, paying less attention to TV
browsing on the internet14.
• The message though TV is temporary, so it may require multiple times to get
customer attention.
• Very costly medium to communicate with.
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Newspaper
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4. Direct communication gaining importance over indirect communication
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On an average 80% of the newspaper revenue come from advertisements. This is
one of the oldest traditional medium used for advertisement by big, small and
medium scale businesses. Newspaper allows marketers to address people in a given
geographic area. The most important feature of newspaper advertising is the
flexibility of marketers in deciding the placement of the ad. Another feature is the
quick turnaround time. The marketers will get customer responses in a day or two. At
the same time newspaper poses lot of disadvantages.
• Ad spaces are more expensive, since the marketers have to compete with
others who are ready to advertise.
• Ads are of short shelves, most of the customers read the newspaper once
only after that they will discard.
• With the increasing popularity of the online newspaper the readership are
declining dramatically.
• Marketers have to pay for non-audience too who will probably never be the
customers.
Magazines
Magazines are more focussed when compared to newspaper and TV media for
advertisements, albeit expensive medium. Magazines medium allows marketers to
reach targeted audiences. More readership involvement in magazines there by
more attention to the advertising campaigns also. The main disadvantages are
• Very costly compared to newspaper
• Limited flexibility in terms of placement and ad format
Radio
This is the most affordable advertising universal medium for small and medium scale
business, rates can generally be negotiated. Customers enjoy the radio once on a
while in home, work place, or even in the car. Wider ranges of flexibilities are
available for marketers according to the demographic.
• Radio listeners spread over many stations, so marketers need to advertise
more than once in several stations to address the audience.
• Most of the customers listen to radio as a background medium they might be
doing something else while listening to radio. That means the advertisement
should be good enough to capture audience attention.
• There is no replay option like TV medium, so targeted customer might miss the
adverts.
Direct Marketing
The direct marketing is the process in which organization market their products or
services to the aim targeted individual consumers with apt, prompt message or offer
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using one or more advertising media. Direct marketing captures the customer
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feedback after conveying the message. Direct marketers often communicate one
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5. Direct communication gaining importance over indirect communication
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to one there by the marketers will create a long lasting customer relationship. This will
create better brand image for the company or the organization and customer
retention.
Direct marketing can also called as “Interactive marketing” or “Database
marketing”, where in marketers analyse customer database which contain customer
demographics, psychographics from the purchasing history. The marketer will push
the products and services which suites their life style or preferences. Direct
marketing also includes sales promotions, vouchers, coupons etc to boost the sales
and also to keep customer satisfaction after sales. There are mainly four medium
used for direct marketing.
Direct mail
Telephone sales (Telemarketing)
The internet
On-site promotions
Direct mail
This is very popular in arts and entertainment industry. Mailing list can be developed
from organization customers, visitor information, database purchase from different
agencies etc. In some cases organization work together and share their database if
there are no competency factors between them.
Direct mail is very effective in targeting audience. The main advantages are
individual attention, cost effectiveness, useful in communicating with lost customers,
inform target audience about your new product service and getting feedback from
them.
Direct marketing has serious drawback if it is not done properly. One among them is
the accuracy and usefulness of mailing list. If you advertise in mass media like TV or
print media, you may or may not target your audience even though the
segmentation is not proper. But when you do direct marketing selecting mailing list
play serious role, an improper selection may even create bad reputation for the
brand which will be complete waste of money.
Effective direct mail techniques
1. Identify your target market; make sure that there is no room for error. Build the
database from your customers or purchase the list from someone. The price of
the list may vary according to the type of list.
2. Ensure the accuracy of the mailing list; don’t send mail to the people who
relocated, died etc that’ll create negative feedback.
3. Make the mail stand out from others; it can be achieved by good design,
promising offers, coupons etc otherwise it may be discarded.
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4. Make sure to leave a space for response from the customer. It can be in the
form of toll free telephone number, coupon to return or order form to
complete.
5. Give quick replies for responses and enquiries; because those responses are
from promising customers.
Telemarketing
As the name implies this marketing can be achieved by calling or texting the
customers. There are mainly two types of telemarketing,
1. Inbound; where in user can call to some toll free number and ask enquiries
redeem their gifts etc, which can also be used as a customer service centre
also.
2. Outbound; the organization contacts the customers though telephone to
reach target markets and deliver message. Normally telemarketing is done
after analysing the customers buying behaviour from CRM and also from
other companies that share the customer information.
Although the telemarketing programs are highly effective, implementation and
execution of the telemarketing program require high expertise level of professionals,
highly compact equipments. Another important problem with the telemarketing
programs are the legality and standard practices applied for marketing which
strictly follow guidelines issues by the government or concerned authorities. For
instance in India, there is a registry called “Do Not Disturb” (DND). Once customer
registers with the registry, marketers are not allowed to do marketing call again. Big
penalties are there for calling to DND customers.
Onsite promotion
The main objective of onsite promotion is to stimulate customer attention. This can
be used to brand the product, services of an organization in a high traffic area. It
can be also done by sponsoring events like sporting events, grand opening trade
shows, social campaigns, exhibitions etc. The main disadvantages of the onsite
promotion are very costly and risky.
Advertising on internet an overview
By the advent of powerful broadband internet connection, ad-skipping digital video
recorders, multimedia mobile phones and portable audio and video player make
the customer to rethink their buying practices. Now a day customers are more
demanding because of the influence of modern digital devices and internet.
According to Korgankar and Wollin1, the web is a constant message delivery,
audience selectivity, multimedia capable, accountable, global reach; audience
controlled advertising exposure and interactivity making it, along with its component
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an advertising medium. The most important point about web advertisement is its
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flexibility, it varies from corporate logos, banners, pop up messages, video ads, flash
ads, pop up messages, email messages and text based links.
Online ad spending in North America
Source: Euromonitor International from World Association of Newspapers/Jupiter Research Note:
Data for 2009 is forecast; figure 1
Advantages of web advertising
Lot of companies are turning to invest more into web for commercials. It can be
seen from the graph above (figure1) that in North America itself they are spending
US$ 17bn in second quarter of 2008 and a humongous growth is happening in online
advertising space between 2005 and 2009.
Both consumers and the organization have complete control doing web
advertisements.
Consumer can filter the ads, whereas companies can target the exact
audience by demographics, psychographics analyzing social behaviour of
the users in web.
Marketers and the consumer can have close relationships with millions of users
simultaneously which opened the door for direct marketing.
The cost compared to the traditional advertising medium when it compared
to TV or other advertising space2, 3.
Online ads can virtually account for unlimited advertising space.
Once consumer captured the attention he/she can watch it over again.
Internet delights over traditional media the opportunity of the marketer to
open up a sales and distribution channels, customer can buy the product
right away after seeing the commercial(s).
Can understand the web surfers habits their by marketer can place relevant
ads for the web surfer next time.
Two way communications can be done using web when it compared to
traditional media like TV, print etc.
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Disadvantages of web advertising
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Advertising media clutter is an issue, as competition of web user becomes
more acute4.
Frequent and unwanted pop-ups make the user annoying, which in-turn
affects user habit to visit the site again5.
Due to the virus attacks and irrelevant messages decrease the trust of the site
and their by it affects marketers` or corporate brand images.
Direct communication in digital world
1) SMS marketing: SMS marketing is a highly effective direct marketing
technique. Initially SMS marketing in Europe created a bad image but Mobile
Marketing association stipulated strict guidelines for SMS advertisement. It is
not possible to send message to everyone. SMS sending can be done only to
those who are subscribed in receiving SMS advertisement. Asian and
European markets are the most effective market for SMS marketing. The SMS
marketing can be in two ways it can be used with a long digit number or a
short code to get customer feedbacks and responses.
2) Bluetooth marketing: This marketing is some sort of permission marketing.
Companies and brands who are interested in publishing different
advertisement can publish to mobile devices and other devices with
Bluetooth capabilities. Before receiving the content the device ask for
permission. This marketing can be effective in shopping malls; where in
everyone can push their advertisement. Recently there was a successful
campaign in India to promote Tata Sumo Grande.
3) Email marketing: This is one of the cheapest form of advertising which
enhances customer relationship, encourage customer loyalty and customer
retention.
Advantages
• ROI can be calculated easily
• Cost effective
• Short period of time for delivery
• Paper free advertisement
• More than half of the email users check their mail once in a day
Disadvantages
• Companies who communicate with their prospective customers will
mark email as spam which will be ineffective in a way.
• It is difficult for the customer to identify the genuine and spam emails.
• According to B2B marketing report15 only 56% of the convincing emails
are accepted by mail servers due to spam algorithms, 20% of the spam
emails are rejected and 8% of the marketing emails are filtered.
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4) Interactive online marketing: Interactive online marketing can also called as
affiliate marketing. Sales generated are used more often to check the
effectiveness, using campaigns and e-commerce application. The main
advantages of marketer is lower costs, better relationships and at the same
time customer also benefit convenience in buying (anytime), provide better
information with less hassles.
Changing behaviour of Consumer attitudes and marketing
There are 2 different factors that contribute the changing behaviour of marketing
communication. Firstly, the mass markets are fragmented; marketers are shifting
away from mass marketing towards personal selling, building relationship with
customers and more narrowly defined towards micro markets. Organization are
diversified there operation strategies. For instance Coca Cola’s marketing
campaigns is an example for this. They are creating segmented advertising for their
products targeting the individuals. Secondly, the vast improvement of information
technology accelerates movement towards segmented marketing. With the help of
information technology the now a day marketers can easily track customer needs.
Marketing has moved though customer acquisition through customer retention
though customer selection. This narrowed the marketing campaign more towards
direct, personal selling.
Figure 2
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As advertising budget shift to adopt new formats and media, the future advertising
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market will depend on four market drivers: attention, originality, measures and
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10. Direct communication gaining importance over indirect communication
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marketing inventories. The graph above shows (figure 2) the forecast made by the
IBM institute of business value analysis. It is evident from the forecast data (it may be
too conservative) digital, mobile and interactive formats are the key driving force for
the overall advertising industry.
Attention
Consumers are increasingly exercising control of how they view, interact with and
filter advertising, they would like to skip ads and concentrate on content. This will
continue to shift their attention from traditional linear TV (TV in which no option for
skipping the content). IBM survey’s says that 71% of respondents use internet more
than 2 hours per day for personal use, however only 48% of the respondents watch
TV for 2 hours per day. Penetration of DVR in US is a typical example where people
can skip the ads and watch their favourites programs only. Moreover the audience
continue to be fragmented10.
Figure 3
Studies from several countries revealed that TV is becoming “background secondary
medium” especially among young users11. From the graph above (figure 3) it can be
seen that only content service with mass adoption is social networks. Only aged
people spend time on traditional TV. From the survey done by IBM almost 53% of
DVR owners in United States were watching 50% of the programs in replay, because
of time convenience and also facility to skip ads and contents.
Originality
The growing popularity for user generated content (UGC) and peer delivered
content make the distinctive factors to more concentrate towards internet rather
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than linear TV. Semi-professionals, amateurs are creating their content and upload it
and share it to their friends and networks. Moreover the new revenue sharing
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program helps amateur, professionals and semi-professionals to create and upload
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strategic video content of products and services which is more appealing than ads
created by agencies.
The consumers are being trusted by influencer, they will watch user generated
content referred by friends from Youtube and video sites. Community based
recommendation improve authenticity; this can be utilized to promote products or
services which is one of the key strategy in social media marketing.
Figure 4
The production cost for a professional video ads are typically US$100,000 to
US$350,000 and more, which cannot is affordable for small businesses. However
utilizing the potential of community you can create ads for low cost with semi-
professionals or amateurs. Current TV pays $1000 to viewer-created advertisements
that choose to air12.
Measurement
Since the technology is evolving day by day and also due to the competition of ad
agencies, advertisers demand much more accountability and ROI. Advertisers are
also demanding for individual specific attention for evaluation of advertisement
effectiveness, which create pressure for traditional mass-market model. Advertisers
are shifting towards impact based rather than impression based; it is evident from
the graph (figure 5) below.
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Figure 5
Marketing inventories
Exploiting the potential of internet lots of new entrants are coming in, which in-turn
opened large inventories for advertising. New platform players are offering
advertisers to purchase ads via aggregated networks. This will create transparency
in the pricing streamlined buying and selling and improved analysis and reporting
capabilities. Within next 5 years the traditional incumbent based advertisements
selling will change and a good amount of selling will be through automated auction
platform. Google’s adwords platform is a typical example for this.
It is no longer efficient to distribute commercials through single platform because of
the consumer fragmentation. The advertisers are forced to move to dynamic and
efficient platforms capable of delivering, planning, measuring effectiveness across
different channels.
Reasons for direct marketing growth in nutshell
• Fast moving changing market
• Changes in technology
• Changes in demographics and life style
• Changing role of direct marketing, more as strategic database marketing
and also it can act as a distribution channel for example Insurance marketing
• Direct marketing can also be used as a promotional tool for brand building
• Consumer fragmentation
• Better accountability
Key challenges for direct marketing
These days consumers are informative with the high penetration of internet
technologies. The economy has been changed from product economy centered
to consumer segment centered. So customer satisfaction is the primary concern.
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• Ad blindness: Customers are aware of ads this will lead them not to click on
the advertisements. Marketers should be innovative in developing and
placing the ads.
• Improved customer know-how: With customer generated reviews with web
2.0 tools like blog, misrepresented data may create problem with campaigns
of the products and services.
• Ad filtering tools: With the new technology tools which can filter emails, pop-
ups and direct communication with the customer in weblogs.
• Growing customer expectations: Competition between companies opened
new room for customer to bargain and expect more.
• Fragmentation of media: With millions of blogs and online media the
competition for advertisements has dramatically increased. Better offering by
different marketers create value segmentation of the cost in the same media.
• ROI measurement: With comprehensive statistics and reports companies can
analyse report and started more demanding to target the audience, that
means more and more accountability create challenges to marketers.
• Increase in privacy among customers make the marketers to apply different
strategies to address customers
• DNC in US and DND in India are real problems for direct marketers
• Customers can’t feel the product before purchasing them
Comparison of direct and indirect marketing
Both direct selling and indirect selling had a common objective which is to increase
profit by sale. But both differ in the effectiveness, because they differ in the media
they use for advertise and also the cost difference.
The cost and effective results of advertising campaigns in internet is 10 times better
than traditional media13.
For branding it would be better to have blending components of traditional
communication and online media.
From the figure below (figure 6), it can seen the online spending of ads in US is very
big compared to TV ads.
Mass Marketing Direct Marketing
Average customer Individual customer
Customer anonymity Customer profile
Standard product Customized market offering
Mass production Customized production
Mass distribution Individualized distribution
Mass advertising Individualized incentives
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Mass promotion Individualized message
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Economies of scale Economics of scope
Share of market Share of customer
All customers Profitable customers
Customer attraction Customer retention
Figure 6
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Source: Euromonitor International from trade sources/national statistics Note: Data for 2009 is
forecast, Credit card transactions in India; figure 7
The figure above (figure 7) shows the online credit card transaction of India. With the
help of direct and indirect communication, it opened a window to new distribution
channel through e-commerce. This also means even in India where internet
penetration is still at its infant stage shows people are spending lot of time in internet.
Conclusion
The influence of internet and modern digital technologies changed the world of
marketing communication. The customer became more demanding and
competition also got high, companies changed marketing strategy from sales to
customer satisfaction and retention. Direct marketing is the ultimate tool to create
customer satisfaction. Major developed countries like US, UK and Australia uses
direct media as one of the most effective marketing medium now. India is also now
shifting the face of mass media to direct media. With new marketing trends like
social media, search engine marketing and twitter, mass media is regaining identity
to an extent. The superior factors that make direct media more popular are its cost
effectiveness, greater accountability with targeted marketing. Now marketers are
trying blended form of marketing, advertising companies are offering 360 degree
solutions for companies and organization. At the same time loads of FMCG
companies are still relying on mass media tools like TV and print medium. Only with
mass media tools the companies can address their need at any place any time.
Mass media is very effective than direct media for brand building. So it is not possible
to rely on direct marketing in modern digital world.
References
1) Korgaonkar, P, and L D Wolin, 2002, ‘Web Usage, Advertising, and Shopping: Relationship
Patterns’, Internet Research: Electronic Networking Applications and Policy, Vol 12, No 2, pp
191–204.
2) Korgaonkar and Wolin, ‘Web Usage, Advertising, and Shopping: Relationship Patterns’.
3) Pelle, Stefano, 2005, ‘Media Innovation: Advertising on the Internet’,
http://www.iimk.ac.in/archives/events/spandan. Last accessed on December 4, 2007.
4) Kanso, Ali M, and Richard Alan Nelson, 2004, ‘Internet and Magazine Advertising: Integrated
Partnership or not?’, Journal of Advertising Research, Vol 44, No 4, pp 1–14.
5) Pelle, Stefano, ‘Media Innovation: Advertising on the Internet’.
6) Bringing in Best Practices in Direct Marketing to Indian Marketers http://www.aghreni.com
7) Marketing communication strategy Level 4.0 ADVANCED DIPLOMA IN MARKETING
MANAGEMENT
8) http://www.portal.euromonitor.com/PORTAL/Magazines/GeographiesHeavy.aspx
9) The end of Advertising we Know it; IBM Institute for Business Value analysis
10) Berman, Dr. Saul J. “Vying for Attention: The Future of Competing in Media and
Entertainment.” IBM Institute for Business Value. 2002.
11) Neus, A., P. Scherf and F. Pörschmann. Media Study 2005 (Germany): Consumption versus
Interaction. IBM Global Business Services, 2005.
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12) “Do you still pay for content?” Current TV. http://current.com/s/faq.htm#faq35
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13) http://fama2.us.es:8080/turismo/turismonet1/economia%20del%20turismo/economia%20
del%20turismo/TOURISM%20INDUSTRY%20IN%20KERALA%20INDIA.PDF
14) Potter, E, 1994, ‘Commercialization of the World Wide Web’, WELL Topic in the Internet
Conference on the WELL, November 16.
15) MRI, 2008; Papper, Holmes Page 12
16) Return Path's Reputation Benchmark Report: "5 ways to increase deliverability" , BtoB
Magazine , July 2008
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