step 5 final

8/7/2019 STEP 5 final

http://slidepdf.com/reader/full/step-5-final 1/92

SUCCESS OF DIRECT MARKETING IN INDIA

CHAPTER: 01

INTRODUCTION TO

DIRECT MARKETING

TYBMS/BCCA’S INSTITUTE OF MANAGEMENT STUDIES 1




Introduction to Direct Marketing

Direct Marketing is a marketing process where companies market to

carefully targeted individual consumers with an appropriate, relevant andtimely offer or message using one or more advertising media to obtain animmediate and measurable response or transaction.

Direct Marketers communicate directly with customers, often on a one-to-one, interactive basis to build and cultivate long lasting customer relationships.

Direct Marketers use detailed databases where they understand customer’sdemographics, attitudes, preferences and purchasing behaviors. With thisknowledge, they tailor their marketing offers and communications to theneeds of narrowly defined segments or even individual buyers.

Direct Marketing is also referred to as Interactive Marketing or Database

Marketing, because it is expected to be two-way communication with thecustomer or prospect and it is database driven, where the database containscustomer demographics, attitudes, preferences and purchasing history and

behavior.

Beyond brand and image building, Direct Marketers usually seek a direct,immediate,and measurable customer response. With digital advertisingmediums and e-commerce websites, it is possible to effectively track andmeasure customer responses, if the customer looked at the offer, respondedto the offer by seeking more information, visited the marketer’s e-commercewebsite, or placed an order, etc.

Early direct marketers used catalogs, direct mailers and telephone calls.They gathered customer names and sold goods mainly by mail andtelephone. Today, with the advance in database and computer technology,direct marketers are using new marketing media – the internet. Internet

provides several mechanisms - email, web advertisements and affiliatedwebsites to drive customers to marketer’s website or stores for sales.





CHAPTER: 02

INTRODUCTION TO

DIRECT MARKETING





Direct marketing in India

The mail service in India is slow though generally reliable. Telephoneservice is poor, but rapidly improving. While private courier services aregrowing strongly and the telecommunications sector is opening up for arange of modern services, until goods can be ordered conveniently anddelivered with certainty, direct marketing will be limited to door-to-door sales. An inefficient state-owned banking system also prevents prompttransfers of funds from consumers to retailers. Credit card companies areincreasingly targeting India's one million cardholders through directly-mailed offers of goods and services.

The most successful direct marketers in India today are the millions of door-to-door sales representatives who visit neighborhoods and villagesacross India. From ice cream vendors to carpet sellers, India's residentialneighborhoods are frequently visited by merchants offering a variety of

products. Some soft-drink companies have used beauty queens to makesurprise knocks on the doors!

Direct Marketing is especially popular in India because by nature Indians donot trust claims made by most of the companies unless they have a first handexperience of the product or a direct contact with the service offered by thecompany. This has been proved in the past with the grand success of theEureka Forbes products in the Indian market. The Eureka Forbes productswere marketed purely through Direct Marketing efforts and have the largestshare in the cleaning products market in India.





CHAPTER: 03

DEFINITION





Definitions

Direct marketing is an interactive marketing system that uses one or moreadvertising media to effect a measurable response & / or transaction at any

location.

1. Direct marketing is the planned implementation, recording, analysisand tracking of customers' direct response behavior over time toderive future marketing strategies, for developing long-term customer loyalty and ensuring continued business growth.

2. Direct marketing is any activity that creates and exploits a directrelationship between you and your individual customer.

3. Direct Marketing is the interactive use of advertising media to

stimulate an (immediate) behavior modification in such a way that this behavior can be tracked, recorded, analyzed and stored on a databasefor future retrieval and use.

4. Any Promotional activity that creates and exploits a direct relationship between an organization and its prospect and / or customer as anindividual.

5. Selling via a promotion delivered individually to the prospectivecustomer

The definitions bring about 3 key elements:

Interactive system: - There is a 2-way communication between the marketer and his/her target market. The response or non-response of the customer completes the communication loop in DM process, e.g. the customer will fillin the response coupon & mail it.

Measurability of response: - The number of coupons indicates the responserate to marketer’s communication.

Direct Marketing activities are not location specific: - It is not necessaryfor the marketer to interact physically with the customer. He / She canestablish contact through mail, phone, fax, or Internet





Direct marketing is a type of advertising campaign that seeks to elicitan action (such as an order, a visit to a store or Web site, or a request for further information) from a selected group of consumers in response to acommunication from the marketer. The communication itself may be in anyof a variety of formats including postal mail, telemarketing, direct e-mailmarketing, and point-of-sale (POS) interactions. Customer response should

be measurable: for example, the marketer should be able to determinewhether or not a customer offered a discount for online shopping takesadvantage of the


http://whatis.techtarget.com/definition/0,,sid9_gci774854,00.html

http://whatis.techtarget.com/definition/0,,sid9_gci774854,00.html




CHAPTER: 04

History and

Development of DirectMarketing





History and Development of Direct Marketing

• 1948 – The first book catalog (Italy)

• 1667 – The first Garden Catalog (England)• 1727 – Mail order library (USA)

• 1833 – customer buying clubs (England)

• 1905 – The first moderns Mail order catalog (UK)

• 1926 – The first book club (USA)

H istory

The term direct marketing is believed to have been first used in 1961 in a

speech by Lester Wunderman, who pioneered direct marketing techniqueswith brands such as American Express and Columbia Records. The term junk mail , referring to unsolicited commercial ads delivered via post officeor directly deposited in consumers' mail boxes, can be traced back to 1954.The term spam, meaning "unsolicited commercial email", can be traced back to March 31, 1993, although in its first few months it merely referred toinadvertently posting a message so many times on UseNet that therepetitions effectively drowned out the normal flow of conversation.

Although Wunderman may have been the first to use the term direct

marketing , the practice of mail order selling (direct marketing via mail)essentially began in the U.S. upon invention of the typewriter in 1867.

The first modern mail-order catalog was produced by Aaron Montgomery Ward in 1872. The Direct Mail Advertising Association, predecessor of the

present-day Direct Marketing Association, was first established in 1917.Third class bulk mail postage rates were established in 1928.

Direct marketing's history in Europe can be traced to the 15th century. UponGutenberg's invention of movable type, the first trade catalogs from printer-

publishers appeared sometime around 1450.


http://en.wikipedia.org/wiki/1961

http://en.wikipedia.org/wiki/Lester_Wunderman

http://en.wikipedia.org/wiki/American_Express

http://en.wikipedia.org/wiki/Columbia_Records

http://en.wikipedia.org/wiki/Spam

http://en.wikipedia.org/wiki/March_31


http://en.wikipedia.org/wiki/UseNet

http://en.wikipedia.org/wiki/Typewriter


http://en.wikipedia.org/wiki/Aaron_Montgomery_Ward



http://en.wikipedia.org/wiki/Direct_Marketing_Association


http://en.wikipedia.org/wiki/Bulk_mail


http://en.wikipedia.org/wiki/15th_century

http://en.wikipedia.org/wiki/Movable_type



http://en.wikipedia.org/wiki/Lester_Wunderman

http://en.wikipedia.org/wiki/American_Express

http://en.wikipedia.org/wiki/Columbia_Records

http://en.wikipedia.org/wiki/Spam

http://en.wikipedia.org/wiki/March_31


http://en.wikipedia.org/wiki/UseNet

http://en.wikipedia.org/wiki/Typewriter





http://en.wikipedia.org/wiki/Direct_Marketing_Association




http://en.wikipedia.org/wiki/15th_century

http://en.wikipedia.org/wiki/Movable_type





CHAPTER: 05

OBJECTIVES OF

DIRECT MARKETING





OBJECTIVES OF DIRECT MARKETING

Although there are many ways in which direct marketing can be applied, onecan break down all the activities into four simple categories. You can ask

people to:1. Buy (or make charity donations) through the post, over the phone, or off the TV set, either for cash or by quoting a credit card or accountnumber.2. Ask for catalogues, or literature, or information, which may comethrough the post, on the telephone or in the hands of salesmen (with or without the consumer's prior knowledge).3. Request a demonstration either in the home, at work, or even at theseller's premises.

4. Visit a retail establishment, a film show or exhibition - or even a political or community event.

To reach chosen objective, one can choose from a variety of routes. The possibilities and permutations are bewildering, but it is essential that one isaware of them all. A sale could never attain in one step, for example, could

be wildly successful if the product is broken down and sold in stages as acontinuity product, or if the sale is made by asking for an enquiry and thenfollowing up repeatedly. Equally, a product could not sell easily for cashmight do very well if you offered it on free trial. So let's look through the

possibilities.

Ways of Achieving the Objectives

1. One stage selling

When people use the words "mail order' they usually think either of the bargain spaces in the weekend papers, glossy colour advertisements in theSunday magazines, or those hard sell advertisements that promise to changeyour life - or shape, or looks - overnight.

Some one-stage selling - the least sophisticated form of direct marketing- is as simple as offering a product for sale in exchange for the full cash

price, to be sent in advance of the goods being delivered. However, asyou can appreciate, any way in which you can soften or delay the awfulmoment when the customer actually has to part with money tends to payoff. Nobody likes paying for anything; even less do they like sending





money off to someone they have never met for something they havenever actually experienced or held in their hands.

Thus one may offer:

The Free Trial, where goods or services may be enjoyed on approvalfor a period before the buyer is committed. Response leaps when usethis offer. You must, however, have a very efficient credit-checkingsystem since in some cases as many as 50 per cent of replies can be

bad debt risks.

The Sale on Credit where only a down-payment is demanded. This isa method worth using if you have the necessary facilities. However,with the growth of charge and credit card usage it is becomingincreasingly restricted to less wealthy markets.

The Sale on Credit where no down-payment is demanded. This is, of course, the easiest payment option of all for the customer and thus themethod which will generate your greatest response. Once again, if youhave the credit-checking facilities and the financial resources to beable to afford to wait for your money, this can be the most profitablemethod of selling in the long run. Significantly, many of the most

successful Direct Marketers often use this method

The conditional free trial where you may have to send all or part of the money before getting the goods, but you are not committed to buyuntil a certain period has elapsed.

The sale by credit or charge card where any of the above four optionsmay also be offered. This is the easiest sale of all, because it's the least

painful way for your customer to pay.2. The continuity relationship

Since all direct marketing businesses succeed best where there is acontinuing relationship between the buyer and the seller, many marketersestablish a contract with the respondent, which has a continuingarrangement built in from the start. Typical are:





Insurance offers, where the initial application may lead to a tenor even twenty year contract.

Loan offers, where people may be repaying for five years or longer.

Mortgage offers, which also end up in a relationship over anumber of years.

Charity appeals or political appeals, where the group maysolicit a covenant (and in the case of many charities, this relationshipmay last so long that the final payment will be after death, in a bequest).

Credit Card applications, where the relationship may endure for decades.

Membership offers - such as those made by the Consumers’

Association or the Automobile Association which may endure untildeath brings a merciful release.

Club offers, where the respondent may be offered a very low price for a selection of books or records or even a free gift to start acollection of cookery cards, for example, and have to make a positiveeffort to extricate himself from the relationship.

Collector's offers, where one starts with the first of a series of collectible items, and carries on through to the end, unless one wishesto cease.

3. Multi-stage selling

Flexibility of a different sort governs the third category we are going toconsider - multi-stage selling. When you make a one-stage sale, then oncethe prospect has either responded or not responded. Either you've mademoney, or you've lost your chance to make money until the next time thatreader sees your ad or mailing.

Moreover, a one-stage sale predetermines the way in which the respondent buys: either they react in the way you suggest at the price you quoted or they don't. But multi-stage selling is much more flexible and in one formor another is probably the area with the greatest potential for most

businesses.

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





Sales follow-ups, where information about a product is advertised,information is sent out and a salesman follows up. Common examplesin the consumer field are double glazing and other home improvements,in business-to-business, computers, copying machines or typewriters

would apply. Retail combination, where a product may be advertised in the press(or in a catalogue sent out by the store) and the respondent may go intothe store rather than buy direct.

Catalogue offers, which may be divided into those where:

the prospect sends for a catalogue to buy things from;

the prospect sends for a catalogue for which he or she may become an argent, deriving commission (savings);

the prospect buys and is later offered the chance of becomingan agent.

Agent's offers, other than the ones outlined above, where the agentwill represent a given line of products and may or may not have to buythe merchandise in advance, with or without a guarantee of money back if the goods are not sold successfully.

Recruitment, where the respondent replies to an ad, gets informationand then goes for

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

interview.Finally, two more multi-stage operations:

Franchise offers, where the respondent sends for details,meets the company or its representative, and may end up going into

business with them. Sequence selling. There are many cases where you can affordto be quite patient in getting a sale. You can afford to try and mould

people's opinions about your product or service before actually going infor the kill.

The simplest form of sequence probably would be where you send out anadvance mailing or make a telephone call to say you are going to make avery generous offer to someone; you then make the offer; and then youmay follow up with another call or mailing to remind people to takeadvantage of the opportunity before it lapses.





This sort of approach is particularly appropriate for a profession likeaccountancy, the law or advertising. People do not wake up every morningand decide they need a new advertising agency or lawyer. You are simplytrying to make sure that when they do have to make sucha decision, they will choose in your favour.

5. Sales promotion linked opportunities .

Many companies - perhaps most companies that are reasonablysophisticated - make offers of one kind or another, which can with a littleingenuity be turned into direct marketing opportunities.

What they all have in common is that a list of names can be generated.

Names can be very valuable. So if your company is engaged in any of thefollowing activities, you have a direct marketing opportunity:

Competitions, where the respondent may or may not have tooffer proof of purchase.

Discounts and free offers, where a coupon may have to beredeemed at the store, or by post. These may be offered inadvertisements; in the package, as with a cigarette pack, or on the back of the pack as with sugar cartons.

Self-liquidating offers, where a product may be offered cheaply

as long as you prove you have purchased the brand. Direct offers of merchandise bearing the brand name, as withoffers of lacoste sweaters, or Nirmal Sarees, or Amul T-shirts.

In all these cases, either direct contact is involved, or it can beintroduced. Thus, for instance, if you are running an advertisement which

bears a redeemable coupon, then if you require that people give thename and address when redeeming that coupon you are able to capture aname and address.

In fact, one of the most powerful weapons at the direct marketer'sdisposal has come about as a result of this sort of activity. This is the

building of large files of consumers with details about their brand preferences, household characteristics and purchasing patterns in-corporated.





CHAPTER: 06

PRINCIPLES OF DIRECT

MARKETING





PRINCIPLES OF DIRECT MARKETING

1. Planning your marketing activity: All direct marketing should form part of a controlled marketing strategy, which has been produced as aresult of market and competitor analysis and in relation to achievableobjectives.

2. Targeting your customer : Customer information should be stored andcapable of manipulation and retrieval from your customer database, tocontact your existing customers. Analysis of this also helps you to

identify characteristics of potential future customers.

3. Measuring your marketing activity: The results of direct marketingshould be measured to tell you what works and what doesn't.

4. Tracking This involves monitoring customers' responses over time,ideally for as long as your relationship with them lasts. This enablesyou to measure their value and understand how much of it is a resultof how you marketed to them is.

5. Customer behavior : Tracking the spending patterns and general behavior of your customer can help you establish which products are popular and which aren't. This can help you determine future productsand strategy.

6. Future strategies: One aim of marketing is to maximize the value of your customers to you. So the previous steps will ensure you have the

information to plan effective and efficient marketing to achieve thisaim.

7. Developing long-term loyalty: By targeting the right customers,offering them what they want and encouraging them to take more of





your products, you will protect your customer database. Your customers will be more likely to stay with you for longer.

8. Encouraging profitable business growth. Increasing the number of

loyal and valuable customers you have and limiting the number of customers with low value and/or high risk achieve this. This increasesturnover and profit, which can be reinvested to ensure that service and

product standards are maintained and that your customers stay happy.





CHAPTER: 07

APPROACHES TODIRECT MARKETING





APPROACHES TO DIRECT MARKETING

1. Stand-Alone Direct Marketing

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

2.Integrated Direct Marketing

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

Peripheral Direct Marketing

In this type of approach, Direct Marketing is employed as only anoccasional, tactical marketing tool. Here direct marketing could be initiatedas a short-term response to decreasing sales or competitive pressures.Hindustan Lever and many other FMCG companies adopt this form.

First impressions mean everything with direct mail. Your goal is tokeep your piece out of the trash bin as long as possible. If certain guidelines

are followed, chances are you can benefit from a response rate of 5 percentor higher, considered above average in the industry.

Make an offer

Your direct mail piece should make it easy for customers to recognize your offer or "hook." Typical offers include a free demo CD-ROM, informational





brochures or product/service coupons--in general, anything that willencourage your audience to take action.

It's your responsibility to determine what you want to accomplish with adirect mail piece, and then design an offer around that goal. The offer or at

least the hint of an offer should be easy to find.

Keep it short

In direct mail, short snippets are the way to go. Long blocks of text lose your reader's interest. While copy is an important component, be sure to keep itsuccinct. Think of direct mail copy as you would a newspaper or magazineheadline. Include a teaser line on the envelope or cover that should betreated as your headline. For example, if you are marketing the release of a

brand-new style of rolling pin, your headline could read, "Our Rolling PinWill Make Your Life Easier."

The body text of the direct mail piece should be brief, yet informative. Theuse of bullet points is highly recommended because it effectivelysummarizes the high points of a business or product. Important contactinformation should be bold or set apart.

Graphically speaking :Generally, the graphic elements in your direct mail piece will not make or break a sale, but appearance can encourage a potential customer to look at the entire direct mail piece.

* Do include a picture of the product on your direct mail sales piece.

Do print in four-color if your budget allows it. You can always print thecover or envelope in four-color process to draw attention and then print theinside in two-color.

* Don't let the offer or copy get lost in the graphic elements.

* Don't be afraid of white space. Multiple graphics and words overwhelmcustomers. Simple is better.

Direct mail will remain an effective marketing tool in the e-commerce era,and your piece is more likely to be successful if you have an attractive offer,effective copy and easy-to-follow graphics.

The direct marketing must give consumers a reason to visit your business’slocation or website. Always include some type of call to action. That actionmay be to visit the website, visit the offline store, or participate in a


http://www.allbusiness.com/north-america/united-states-michigan-metro-areas-detroit/839910-1.html





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





CHAPTER: 08

DIFFERENCE BETWEEN

MASS MARKETING ANDONE-TO-ONE

MARKETING





DIFFERENCE BETWEEN MASS MARKETING AND ONE-

TO-ONE MARKETING

MASS MARKETING ONE TO ONE MARKETING

Average customer Individual customer

Customer anonymity Customer profile

Standard product Customized market offerings

Mass production Customized production

Mass distribution Individualized distributionMass advertising Individualized messages

Mass promotion Individualized incentives

One way communication Two way communication

Economies of scale Economies of scope

Share of market Share of customers

All customers Profitable customers

Customer attraction Customer retention

If you are ready to get the word out about your business, one of the steps thatyou need to do is to select the right media where you will advertise andPromote your business.

For a small business, every Rupee is precious. Small businesses do notadvertise for the sake of advertising. Instead, they want to get the mostreturn for their investment. Your advertising campaign should translate togreater sales, more response and healthier bottom line.

• An important step to developing your sales and marketing plan is to

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

business may be wrong for another.





CHAPTER: 09

ADVANTAGES OF

DIRECT MARKETING





ADVANTAGES OF DIRECT MARKETING

1. Home shopping is fun, convenient & hassle free.

2. Saves time3. Introduces customer to a large variety of products at a time.4. Comparative shopping is possible by browsing through mailcatalogues & on line shopping.5. Customers can order goods for themselves & for others also.6. Sellers also benefit, as they can personalize & customize messages.7. Direct marketers can build a continuous relationship with eachcustomer e.g. Parents of newborn babies may receive periodic mailingsdescribing new clothes, toys & other goods as the child grows. For e.g.

Nestles baby food division continuously builds a database of newmothers & sends personalized packages of gifts & advice at the keystages in the baby's life.8. Direct marketing strategies can be timed to reach prospects at theright time & moments & therefore it receives a higher readership becauseit is sent to more interested prospects.9. Direct marketing also makes the direct marketers’ offer & strategyless visible to competitors.10. Direct Marketers can measure the responses to their campaigns todecide which of them have been more profitable.

11. Tracking performance allows direct marketing to analyzerelationship between customer characteristics & buyer behavior in their database12. DM activities have an advantage over general marketing activitiesin the area of performance tracking. Campaigns can be monitored todetermine if they are successful, knowing precisely what worked & whatdid not. This allows selling goods effectively and leads to a moreefficient allocation of resources.13. DM attempts to elicit response. In the process, the communication

performs both, advertising & selling function without an intermediary

14. Because no intermediaries are needed, they reduce the intermediarymark ups & increase profits





15. Precision Targeting – Direct marketing activities are aimed atindividuals. This reduces the waste inherent in many other types of communications.16. The prospect is encouraged to place an order or trust informationmore as he is calling a number or sending a card

Direct marketing is attractive to many marketers, because in many cases its positive effect (but not negative results) can be measured directly. For example, if a marketer sends out one million solicitations by mail, and tenthousand customers can be tracked as having responded to the promotion,the marketer can say with some confidence that the campaign led directly tothe responses. The number of recipients who are offended by the junk mail/spam, however, is not easily measured. By contrast, measurement of other media must often be indirect, since there is no direct response from a

consumer. Measurement of results, a fundamental element in successfuldirect marketing, is explored in greater detail elsewhere in this article. Yetsince the start of the Internet-age the challenges of Chief MarketingExecutives (CMOs) are tracking direct marketing responses and measuringresults

Direct marketing is a huge business in India. A large percentage of that isgenerated by direct mail--a one-to-one personal relationship between seller and buyer. The advantages are clear:

* Direct mail can be focused, largely because of the ease, affordability andavailability of list services.

* Direct mail sales can be predicted with relative accuracy.

* Direct mail allows sellers to take the product/service directly to potential buyers.







Other advantages of direct marketing include

Flexible Targeting

Direct marketing enables you to talk directly identify, isolate andcommunicate with well-defined target markets. This means you get a higher conversion and success rate than if you tried communicating to everyone inthe mass market. And direct marketing is also far cheaper than mass marketcommunication.Multiple Uses:

Direct marketing doesn't just have to be used to sell - it can be used to testnew markets and trial new products or customers, to reward existingcustomers to build loyalty, collect information for future campaigns, or segment a customer base.

Cost-Effectiveness:

The cost per acquisition of direct mail can be significantly less than other marketing methods. Plus once you've acquired a customer, you can also

benefit from highly profitable repeat sales, gained once again through direct

marketing methods.

Ease of Management:Direct marketing provides greater control and accountability than other marketing methods. It is easy to measure results because you know exactlyhow many people you've contacted in the first place. Once you've run adirect marketing campaign and know the conversion rates involved, you canwork on refining and improving your success rates. Plus it also makes iteasier to plan, forecast and budget for future direct marketing campaigns.

Rapid Delivery:Direct marketing is both swift and flexible in achieving results. This isespecially true for telemarketing, one of the direct marketing tools, as theresults of a conversation can be logged immediately and scripts adjustedstraight away to improve results.





Testing Capability:Direct marketing allows you to test, test and test again in order to hit uponthe most successful combination of direct marketing tools. Any of thesevariables such as timing, list, message, mailer and offer can be adjusted,tested again, and measured to find the optimum direct marketing

proposition.

Relationship Building:Direct marketing is far more effective at initiating and developing ameaningful dialogue with new customers. From the outset you have a directrelationship with them, which can also be used as part of a push pull strategyto stimulate demand for retailers.

Targeting of Messages:

Direct marketing can enable you to target different messages to differentrecipients. Using technology such as digital printing, it's even possible todisplay different images, designs and offers in a direct mailer according towho it's being sent to, as well as personalising the mailer to the recipient toincrease conversion rates.

Geographic Targeting:

Direct marketing can be used for any level of geographic targeting, whether it's the local area surrounding a shop or restaurant, regional targeting by

postcode or county, national targeting and even international - when direct

marketing can prove a far cheaper way of testing the market than a costly personal sales visit.

Direct marketing exploits the growth in new technology, and can create acompletely new distribution channel direct to the customer or end user.Discover the advantages of direct marketing for your business.

Direct marketing is a sales method by which advertisers approach potentialcustomers directly with products or services. The most common forms of direct marketing are telephone sales, solicited or unsolicited emails,catalogs, leaflets, brochures and coupons. Successful direct marketing alsoinvolves compiling and maintaining a large database of personal informationabout potential customers and clients. These databases are often sold or shared with other direct marketing companies.





For many companies or service providers with a specific market, thetraditional forms of advertising (radio, newspapers, television, etc.) may not

be the best use of their promotional budgets. For example, a company whichsells a hair loss prevention product would have to find a radio station whoseformat appealed to older male listeners who might be experiencing this

problem. There would be no guarantee that this group would be listening tothat particular station at the exact time the company's ads were broadcast.Money spent on a radio spot (or television commercial or newspaper ad)may or may not reach the type of consumer who would be interested in ahair restoring product.

This is where direct marketing becomes very appealing. Instead of investingin a scattershot means of advertising, companies with a specific type of

potential customer can send out literature directly to a list of pre-screened

individuals. Direct marketing firms may also keep email addresses of thosewho match a certain age group or income level or special interest.Manufacturers of a new dog shampoo might benefit from having the phonenumbers and mailing addresses of pet store owners or dog show participants.Direct marketing works best when the recipients accept the fact that their

personal information might be used for this purpose. Some customers prefer to receive targeted catalogs which offer more variety than a general mailing.

Direct mail is among the cheapest ways to attract a new customer

A 2001 survey by The Pitney Bowes and Peppers and Rogers Group showedit's a an effective marketing tool. 34% of those surveyed said that direct mailis the most valuable method companies use to establish and further customer relationships, the highest rated marketing method in the survey. Respondentsto the survey also felt that Direct Mail is effective at building customer relationships because it is familiar (95%), convenient (94%), interactive(93%), universal (93%), private (87%) and personalized (84%). The surveyalso found that, now more than ever, consumers value organizations thatmake an effort to communicate and build a relationship with them through

the mail.


http://www.wisegeek.com/what-is-email.htm

http://www.wisegeek.com/what-is-email.htm




The survey discovered that Direct Mail:

• Inspires action -- Forty-five percent of the respondents said that if they received a targeted direct mailing they would mention thecompany to their friends, call if more information was needed (44%),open a second piece of mail sent by the company (43%), further investigate the company on the Internet (39%) and buy something

being advertised (22%).• Has a purpose -- Consumers said direct mail educates, organizes and

relaxes them.•

Has positive attributes - Eighty two percent of the recipients enjoy thecontrol in choosing when to open a mail piece, 78% appreciate itsnon-intrusive nature, 65% feel positive about its security, and 56%feel more involved with an organization that stays in touch using themail.

What's the advantage? With direct mail, you communicate one-on-onewith your target audience. You control who receives your message, what themessage communicates, when it's delivered, and how many people you

reach

It's cheaper to retain your current customers than gain new ones. And

repeat customers spend more. According to global management consultingfirm Bain and Co., a 5 percent increase in retention yields profit increases of 25% to 100%. And on average, repeat customers spend 67% more than newcustomers.

Use a newsletter as a marketing piece to mail to prospective clients. Your newsletter will contain information on your business and what you offer.

Ensure repeat business by staying in touch with your customers. Show themyou care on a personal level and drive this belief home with a newsletter.Create excitement and inform your customers about your new services and

products. Let them know that you are an expert in your field.





CHAPTER: 10

LIMITATIONS OFDIRECT MARKETING





LIMITATIONS OF DIRECT MARKETING

(A) Acquisition of data of individual customers may be difficult – Direct marketing is effective only when all information about theindividual customer is available. It may be difficult to acquire this data,as people would be reluctant to part with personal information.

(B) The customers could be exposed to information overload – Intoday’s rich business and personal environment everyone is bombardedwith all types of data. Daily people receive letters, voice mails,catalogues etc. Welcome and unwelcome information accosts the sensesthrough the radio, television, telephone, books etc. Direct marketers are

perceived to be contributing to this overload.

(C) Requires highly skilled staff to analyze each customer profile – In Direct marketing communications, individual customers should beaddressed by name & title. Also information from database is used to

produce specific appeal based on consumers personal characters &/or past purchase behavior. It is therefore important that the profile of eachindividual customer is accurately maintained. This would be possibleonly if the staff employed is highly competent to carry out thisaccurately.

(D) Customer Service rather than customer loyalty is moreimportant in direct marketing

Direct marketing does have some negative aspects, however. Many peopleare unaware of how the personal information they include on an order formor survey may be used for targeted advertising later. One prevailing

philosophy in direct mailing circles is the idea that if a customer orders aswimsuit from a clothing catalog, he or she might naturally be interested inswimming pool supplies or exercise equipment as well. This could lead todirect marketing overload, as potential customers and clients becomeoverwhelmed with catalogs, unsolicited emails and unwanted phone calls.


http://www.wisegeek.com/what-is-philosophy.htm

http://www.wisegeek.com/what-is-philosophy.htm




There is also the concern that personal information collected by legitimatedirect marketing agencies could be purchased by unscrupulous or shadycompanies for the express purpose of fraud.

Many direct marketing companies belong to self-policing associations whichactively discourage fraudulent or invasive use of their databases. Legitimatedirect marketing firms should also offer methods by which individuals can'opt out' of these lists by request. Direct marketing agencies must respect thedo-not-call list maintained by government agencies such as the FederalTrade Commission (FTC). Customers also have the right to unsubscribe tounsolicited catalogs and to block bulk emails from their in-boxes. Directmarketing can be a very cost-effective sales tool for specialized companies,as long as it is used properly and sparingly.

While many marketers like this form of marketing, some direct marketingefforts using particular media have been criticized for generating unwantedsolicitations. For example, direct mail that is irrelevant to the recipient isconsidered junk mail , and unwanted email messages are considered spam.Some consumers are demanding an end to direct marketing for privacy andenvironmental reasons which direct marketers are able to provide by using"opt out" lists, variable printing and more targeted mailing lists.


http://www.wisegeek.com/what-is-fraud.htm

http://www.wisegeek.com/what-is-fraud.htm




CHAPTER: 11

Channels of Direct

Marketing





Channels of Direct Marketing

Direct Marketing is the used of consumer direct channel to reach and deliver

goods and services to customer without using marketing middlemen. Thesechannels include direct mail, catalogs, telemarketing, interactive T.V.,kiosks, web sites and mobile devices. Direct Marketing is one of the fastestgrowing avenues for serving customers.

Direct marketers seek a measurable response, typically a customer order.This is sometimes called Direct Order Marketing. Today many directmarketers use direct marketing to build a long term relationship with thecustomer. Sales produced through traditional direct marketing channels have

been growing rapidly. Electronic marketing is showing even more explosive

growth the extra ordinary growth of direct marketing is a result of manyfactors. Market de-massification has resulted in an ever increasing number of market niches. Higher cost of driving, traffic congestion, parkingheadaches, lack of time, a shortage of retails sales help, and lines at checkoutcounters all encourage-home shopping.

Prospect Consumer / Customers: When targeting the prospect consumers or customersevery direct marketer must target the social and egoistic need. The social need is the third

in the Maslow’s Hierarchy pyramid. The social need includes such needs as love,affection, belonging and acceptance. People seek warm and satisfying human relationshipwith other people. Because of the importance of social motives in our society advertisersof many product categories (like us) emphasize this appeal in their advertisement.

Egoistic need can take either an inward or an outward orientation or both. Inwardlydirected ego needs reflect an individual’s need for self acceptance, self esteem, successand independence. Outwardly directed ego needs include the need for prestige, reputationstatus and recognition from others. The presumed desire to ‘show off ’ one’s success andachievement through material possessions is a reflection of an outwardly oriented ego

need.

We are targeting the egoistic need (outward orientation) of Maslow’s Hierarchy of motives because people desire to show off one’s success and achievement through material possessions.





Some direct marketers also use media such as door hangers, package inserts, magazines,newspapers, radio, television, email, internet banner ads, pay-per-click ads, billboards,transit ads. And according to Ad Age, "In 2005, Indian agencies generated more revenuefrom marketing services (which include direct marketing) than from traditional advertisingand media

Direct mail:

The most common form of direct marketing is direct mail, sometimes

called junk mail, used by advertisers who send paper mail to all

postal customers in an area or to all customers on a list.

Any medium that can be used to deliver a communication to a customer can be employed in direct marketing. Probably the most commonly used

medium for direct marketing is mail, in which marketing communicationsare sent to customers using the postal service. The term direct mail is usedin the direct marketing industry to refer to communication deliveries by thePost Office, which may also be referred to as "junk mail" or "admail" andmay involve bulk mail.

Junk mail includes advertising circulars, catalogs, free trial CDs, pre-approved credit card applications, and other unsolicited merchandising invitations delivered by mail or to homes and businesses, or delivered toconsumers' mailboxes by delivery services other than the Post Office. Bulk

mailings are a particularly popular method of promotion for businessesoperating in the financial services, home computer, and travel and tourismindustries.

In many developed countries, direct mail represents such a significantamount of the total volume of mail that special rate classes have beenestablished. In the United States and United Kingdom, for example, there are

bulk mail rates that enable marketers to send mail at rates that aresubstantially lower than regular first-class rates. In order to qualify for theserates, marketers must format and sort the mail in particular ways - whichreduces the handling (and therefore costs) required by the postal service.

Advertisers often refine direct mail practices into targeted mailing , inwhich mail is sent out following database analysis to select recipientsconsidered most likely to respond positively. For example a person who hasdemonstrated an interest in golf may receive direct mail for golf related

products or perhaps for goods and services that are appropriate for golfers.


http://en.wikipedia.org/wiki/Insert_(print_advertising)

http://en.wikipedia.org/wiki/Email

http://en.wikipedia.org/wiki/Banner_ads

http://en.wikipedia.org/wiki/Pay-per-click

http://en.wikipedia.org/wiki/Billboards


http://en.wikipedia.org/wiki/Advertising

http://en.wikipedia.org/wiki/Compact_Disc

http://en.wikipedia.org/wiki/Credit_card

http://en.wikipedia.org/wiki/Merchandising

http://en.wikipedia.org/wiki/Mail

http://en.wikipedia.org/wiki/United_States

http://en.wikipedia.org/wiki/United_Kingdom

http://en.wikipedia.org/wiki/Database

http://en.wikipedia.org/wiki/Golf

http://en.wikipedia.org/wiki/Insert_(print_advertising)

http://en.wikipedia.org/wiki/Email

http://en.wikipedia.org/wiki/Banner_ads

http://en.wikipedia.org/wiki/Pay-per-click

http://en.wikipedia.org/wiki/Billboards


http://en.wikipedia.org/wiki/Advertising

http://en.wikipedia.org/wiki/Compact_Disc

http://en.wikipedia.org/wiki/Credit_card

http://en.wikipedia.org/wiki/Merchandising

http://en.wikipedia.org/wiki/Mail


http://en.wikipedia.org/wiki/United_Kingdom

http://en.wikipedia.org/wiki/Database

http://en.wikipedia.org/wiki/Golf




This use of database analysis is a type of database marketing. The United States Postal Service calls this form of mail "advertising mail" (admail for short).

Telemarketing :

The second most common form of direct marketing is telemarketing, in

which marketers contact consumers by phone. The unpopularity

of cold call telemarketing (in which the consumer does not expect

or invite the sales call) has led some US states and the US federal

government to create "no-call lists" and legislation including

heavy fines. This process may be outsourced to specialist call

centers.

In the US, a national do-not-call list went into effect on October 1, 2003.Under the law, it is illegal for telemarketers to call anyone who hasregistered themselves on the list. After the list had operated for one year,over 62 million people had signed up. The telemarketing industry opposedthe creation of the list, but most telemarketers have complied with the lawand refrained from calling people who are on the list.In India too similar kind of list has come into effect recently.

Canada has passed legislation to create a similar Do Not Call List. In other countries it is voluntary, such as the New Zealand Name Removal Service.

Email Marketing :

Email Marketing may have passed telemarketing in frequency at this pointand is a third type of direct marketing. A major concern is spam,which actually predates legitimate email marketing. As a result of the

proliferation of mass spamming, ISPs and email service providershave developed increasingly effective E-Mail Filtering programs.These filters can interfere with the delivery of email marketingcampaigns, even if the person has subscribed to receive them, as

legitimate email marketing can possess the same hallmarks as spam.


http://en.wikipedia.org/wiki/Database_marketing

http://en.wikipedia.org/wiki/United_States_Postal_Service


http://en.wikipedia.org/wiki/Telemarketing

http://en.wikipedia.org/wiki/Cold_call

http://en.wikipedia.org/wiki/United_States_National_Do_Not_Call_Registry


http://en.wikipedia.org/wiki/Canada

http://en.wikipedia.org/wiki/Canadian_Do_Not_Call_List

http://en.wikipedia.org/wiki/New_Zealand_Name_Removal_Service

http://en.wikipedia.org/wiki/Email_Marketing

http://en.wikipedia.org/wiki/Spam_(electronic)

http://en.wikipedia.org/w/index.php?title=E-Mail_Filtering&action=edit&redlink=1

http://en.wikipedia.org/wiki/Database_marketing



http://en.wikipedia.org/wiki/Telemarketing

http://en.wikipedia.org/wiki/Cold_call



http://en.wikipedia.org/wiki/Canada

http://en.wikipedia.org/wiki/Canadian_Do_Not_Call_List

http://en.wikipedia.org/wiki/New_Zealand_Name_Removal_Service

http://en.wikipedia.org/wiki/Email_Marketing

http://en.wikipedia.org/wiki/Spam_(electronic)

http://en.wikipedia.org/w/index.php?title=E-Mail_Filtering&action=edit&redlink=1




Broadcast faxing :

A fourth type of direct marketing, broadcast faxing, is now less commonthan the other forms. This is partly due to laws in the United States

and elsewhere which make it illegal.

Voicemail Marketing :

A fifth type of direct marketing has emerged out of the market prevalence of personal voice mailboxes, and business voicemail systems. Due to theubiquity of email marketing, and the expense of direct mail andtelemarketing, 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 resultedin an abundance of "voice-spam", and prompted many jurisdictions to passlaws regulating consumer voicemail marketing.

More recently, businesses have utilized guided voicemail (a applicationwhere pre-recorded voicemails are guided by live callers) to accomplish

personalized business-to-business marketing formerly reserved for telemarketing. Because guided voicemail is used to contact only businesses,it is exempt from Do Not Call regulations in place for other forms of voicemail marketing.

Couponing :

Couponing is used in print media to elicit a response from the reader. Anexample is a coupon which the reader cuts out and presents to a super-store check-out counter to avail of a discount. Coupons in newspapersand magazines cannot be considered direct marketing, since themarketer incurs the cost of supporting a third-party medium (thenewspaper 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 thatthe consumer seeks and welcomes.

Direct response television marketing :

A related form of marketing is infomercials. They are typically called direct

response marketing rather than direct marketing because they try to


http://en.wikipedia.org/wiki/Fax









achieve a direct response via broadcast on a third party's medium, butviewers respond directly via telephone or internet.

TV-response marketing--i.e. infomercials--can be considered a form of direct marketing, since responses are in the form of calls to telephonenumbers given on-air. This both allows marketers to reasonably concludethat the calls are due to a particular campaign, and allows the marketers toobtain customers' phone numbers as targets for telemarketing. Under theFederal Do-Not-Call List rules in the US, if the caller buys anything, themarketer would be exempt from Do-Not-Call List restrictions for a period of time due to having a prior business relationship with the caller. Major

players are firms like QVC, Thane Direct, and Interwood Marketing Groupthen cross-sell, and up-sell to these respondents.

Direct selling :

Direct selling is the sale of products by face-to-face contact with thecustomer, either by having salespeople approach potential customersin person, through indirect means such as Tupperware parties.

Integrated Campaigns :

For many marketers, a comprehensive direct marketing campaign employs amix of channels. It is not unusual for a large campaign to combine

direct mail, telemarketing, radio and broadcast TV, as well as onlinechannels such as email, search marketing, social networking andvideo. In a report conducted by the Direct Marketing Association, itwas found that 57% of the campaigns studied were employingintegrated strategies. Of those, almost half (47%) launched with adirect mail campaign, typically followed by e-mail and thentelemarketing.


http://en.wikipedia.org/wiki/Infomercials

http://en.wikipedia.org/wiki/Infomercials




Direct marketers can use a number of channels for reaching individual prospects and customers. These include face-to-face selling, direct mail,catalog marketing, telemarketing, TV and other direct-response media, kiosk marketing, and e-marketing.

1. Face-To-Face Selling

The original and oldest form of direct marketing is the field sales call e.g.Eureka Forbes, Real Value - Ceasefire. Today most industrial companiesrely heavily on a professional sales force to locate prospects, develop theminto customers, and grow the business; or they hire manufacturers'representatives and agents to carry out the direct-selling task addition, many

consumer companies use a direct-selling force: insurance agents,stockbrokers, and distributors working for direct-sales organizations such as,Oriflame, Avon etc.

2. Group Selling

A. Exhibitions and Trade Shows

Exhibitions are a hybrid medium. Some exhibitions are like broadcast

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

Exhibitions must be used when:Sales calls are expensive and you want to get many customers visiting

you rather than you visiting them;You want to attract new customers and the exhibition has proven

quality attendance. In this respect, the exhibition functions like a rentedlist;





Complex concepts are being demonstrated, so instead of individualdemonstrations having to be mounted all over the country, manycustomers can see the demonstration in one location.

e.g. Opel, Honda, Tata, Consumer Durables

B. Sales seminars and other company-sponsored special events

These include the following:

o The straightforward sales seminar, where a concept is described

and perhaps audio-visual techniques are used to demonstrate it inaction;o The physical demonstration of the product, often held in your

sales office or at the factory;o Awareness and training events, where your aim is to educatecustomers so that they can appreciate the value of your companyoffering. This is the 'soft sell' approach;o Entertainment, e.g. visits to sporting and cultural events. Here

your aim is to reward your customer for loyalty and to further cementthe relationship.

All these have much in common with exhibitions from a direct marketingview point. The difference is that, being sponsored by you, all thoseattending must be invited by you or your business partners (very common in

business-to-business marketing). To ensure the right quality of attendee,direct marketing is the medium most commonly used to market such events.E.g. British Airways, Time–share Club selling.

3.Direct Mail

Direct-mail marketing involves sending an offer, announcement, reminder,or other item to a person. Using highly selective mailing lists, direct mar-keters send out millions of mail pieces each year—letters, flyers, foldouts.

Direct mail can be used effectively in both acquisition & retention. Directmail personalization is very common. Today, nearly every mailing to a-firm's prospects and customers has the name of the target person, along withhis or her address. The days when direct marketers sent mailings withenvelopes addressed "To the resident" are nearly gone. This personalization





is possible because of computing power & massive database that containnames & addresses. Sophisticated computer programs mass-produce

personalized mails by feeding names & addresses onto letters and other pages such as those in magazines. This creates the illusion of a personalcontact between the seller and a target market e.g. ICICI, HDFC, Citibank,Reader’s Digest

Direct mail is flexible because of its ability to customize a message based onthe audience it is appealing to and the circumstances under which that appealis being made. As a medium, the mails have no fixed audience parameters.Unlike other media, such as television, radio, magazines, and newspapers,direct mail is not constrained in how it defines the scope and location of itstarget audience. Thus, the mailer, not the medium, determines the nature andsize of any direct-mail effort.

Thus, the advantages of direct mail are as follows:

Selectivity

Personalization

Flexibility

Isolation

Response rates

4. Direct- Response Television Commercials

Today's revolution in direct marketing is most evident in the way direct-response commercials look, implying that the audiences react mainly to thecreative approach of what they see. However, like any other form of advertising, direct-response commercials seek to communicate withmembers or target markets - benefits are described, a set of supportingreasons for why the product delivers those benefits is explained Thesereasons establish the credibility of the product and the offer and may belinked to attributes of the product such as how it works or how it is made or

designed. Credibility is often derived from demonstrations and testimonials.

Direct-response advertisements are designed to provoke a specific actionfrom the prospects. The object may to be the viewer to place an order bycalling a number or, less frequently, to write for more information, Direct-response television offers produce 60-to-80 percent of the-orders via toll-free phone, with the rest coming in by mail. Toll-free numbers connect the





caller with phone centers that handle incoming calls they generally operateseven days a week and are staffed to handle the anticipated phone volume.e.g. Asian Sky shop, TSN.

5. Direct Response In Print Media.

Magazines and newspapers convey messages on printed pages to massaudiences or highly segmented audiences, depending on which specific

publication is selected. Direct marketers benefit from prints in the followingways

• Longer shelf life compared to direct mail• Pass-along readership potential• Regional and demographic segmentation• Print also allows direct marketers to widen their customers base to non-

mail order buyers.Making magazine and newspapers advertising work. Direct-responsemagazine and newspapers space advertising must ask the reader to dosomething. To make a sale, the advertisement must present enoughinformation to stimulate a purchase decision or generate an inquiry, whichwill be followed up by mail or a personal sales call. e.g. Asian Paints, Berger Paints, McDonalds, Dominos, Outlook, The Week. There are two broad

objectives while preparing a direct marketing strategy:• Acquisition - In media planning, for customer acquisition, the need is to

locate, identify, & directly contact potential customers in the targetmarket. The core aim of such campaigns is to recruit maximum number of target customers at the minimum cost.

• Retention - In retention, the relationship with the customer deepens &the organization can begin to record data on preferences & habits. Atthis stage the choice of communication media can be customer defined.

Improving cost efficiency & effectiveness in interaction with the customer isimportant. Reduce the customer paper cycle & treat more valuablecustomers differently by contacting them directly through telemarketing.

6. Catalogs





The word catalog has been derived from the Greek word 'Katalogos',meaning 'to list' the use of the word list may seem simple, but even todaycatalogs are most often both visual and verbal listings of products for sale.Products are pictured with informational copy designed and worded to enticethe reader to buy. Sophistication of design, photographs, art, ink, and glossy

paper have transformed the original unadorned 'list" into one that is fullycustomized and ready to entertain, educate, and sell with the flip of a page.

Types of catalogs

Catalogs are first classified according to whether they are for consumers or business organizations Consumer catalogs have mass circulations, while business catalogs have much lower circulations. Consumer catalogs aredistinguishable by the types of items they carry, the target markets they want

to reach, and the quality of their appearance and design. While someconsumer

catalogs are designed to generate retail store traffic, the majorities are fromfirms that concentrate almost exclusively on catalog sales.. e.g. Tour operators, Titan, Tanishq

Business-to-Business catalogs sell such items as office supplies andcomputer accessories. They usually carry specific types of items such as

paper products or electronics as opposed to a general selection. The catalogs

are mailed often to a select list of prospects or to those buyers who have placed an order during a fixed period of time. e.g. Omega Stationery,Anupam Stationary, Kores, Siemens.

7. E-mail and the Internet

The Internet provides marketers with the ability to interact with people far more. Its main benefits to the direct marketer include the complementary use

besides other more classic direct marketing methods to supply further

information. It also provides a platform for information on benefits andservices for any new potential prospects and a means to apply online or request more information, ask questions or register online. It can berefreshed regularly and cheaply, which can be far more efficient thanupdating a catalogue. Banner ads can be placed on complementary sites toattract your chosen target audience to your site to increase response to





tactical offers, as well as e-mail marketing to raise awareness of your campaigns and offers.e.g. Amazon.com, Bazee.com, Rediff , Yahoo.

8. Telemarketing and m-commerce

Telemarketing involves the use of the telephone and calls centers to attract prospects, sell to existing customers, and provide service by taking ordersand answering questions. Telemarketing helps companies increase revenue,reduce selling costs, and improve customer satisfaction.

Telemarketing can be an important part of an integrated marketing

communication program. The telemarketing objective is to reach customersin a personalized, cost- effective interaction that meets customer needs. Thescope of telemarketing is limited only by the imagination of the directmarketer. Although no other marketing tool can match the cost-effectiveness, flexibility, control, and speed of the telephone, it takes morethan just good telephones to get good results. A telemarketing firm musthave qualified telephone operators who have been well trained in the use of the telephone as a marketing tool. This includes training in proper voiceinflections, listening skills, persistence, and patience. Companies use callcenters for inbound telemarketing (receiving calls from customers) andoutbound telemarketing (initiating calls to prospects and customers). e.g.ICICI, Citibank, HSBC, Orange, Airtel

In fact, companies carry out the following types of telemarketing:

• Selling, including outgoing and incoming callings

• Setting qualified appointments.

• Generating lead advertisements

• Surveying.

• Providing customer service.

• Advertising (Public Relations)

• Pursuing collections.

9. Inserts





Many publications offer to place flyers, inserts for direct marketers. Somereaders find it irritating but many respond well as they are the first thing inthe journal that they see & thus have an effective impact. Most insertsoutperform sales advertisements but they tend to be three to six times moreexpensive depending on the quality of production. For a direct marketer itmeans that your message is isolated from the run of the journal & has the

opportunity to stand out more effectively prepaid reply cards & free phoneresponse numbers make it easy to for people to respond e.g. Computer Institutes

10.Videotext and interactive TV

Here the consumer's TV set is linked with a seller's catalog by cable or telephone lines Consumers can place orders via a special keyboard deviceconnected to the system Much research is now going on to combine TV,telephones, and computers into interactive TV

11.Short messaging service (SMS)

SMS is the written text service, which is sent from mobile to mobile andalso, though less widely used, from PC to mobile and from digital TV set-

top box to mobile. This is often called 'message to mobile'. As this channelis fairly new, it has the benefit of increased cut-through and impact on itsaudience who may still be receiving marketing through SMS for the firsttime. With SMS comes the promise of personal and local marketing that is

both interactive and immediate. However, because this is an incredibly personal channel, care should be taken to ensure the message is targeted tothe right person, at the right time, with the right offer, or else the messagecan be lost and damage done. Results have shown that the more interactionyou have with the receiver, and the more value you add, the better theresponse.

SMS communication should never be used as a stand-alone campaign. Themedia space is simply not robust enough to communicate on its own.However, the combined impact of brand activity and a strong timely offer through SMS can have a big impact. Mobile will enhance but not replacetraditional marketing functions.





Teleshoping / home shopping:

Teleshoping, alternatively known as home shopping, is one of the relativelymore recent editions of the direct marketing. Here, the marketers hawks the

products in the air and the consumers watches it on his television screen athome phones up the marketer and buys his requirement.

• Benefits all the groups in the game..

Benefits the customer. World over shrinking leisure time on the part of theconsumers has contributed to the growth of teleshopping. This now

becoming true of the Indian Consumers too. Especially the Urban middleclass consumers. In addition to the convenience of shopping the customer isalso belter off with teleshopping in the form of lower prices and gift offersetc. Teleshopping network sell their words on the slogan ; “ The productsyou see on your screen are just a phone call away, you get some discount aswell “.

Benefit the manufacturer. Manufacturers are happy with the idea, as it promotes their sales and reduces their costs. To them, teleshopping serves asa good supplement or substitute, as the case may be , for conventionalmarketing through various marketing channels. It provides them a direct link to the consumer. they also save the margins, as they by pass the channels.They can use these savings for remunerating the telle shoping network andfor offering discounts to the customer and build up sales. Infact one major characteristic of teleshopping is that it is a low cost retailing system.

More over teleshopping, with its highly targeted marketing enables the

manufacturers to cut their advertising as well. Actually it gives them thetwin benefit of lower cost and higher effectiveness of communication as itcatches the target viewers better compared to conventional advertisingmethods. surveys indicate that the recall level is quite high in teleshopping .it is a particularly good medium for concept selling ad for selling new

products as it permits full demonstration.





Benefit the marketer / teleshopping network : To the marketer i.e. theteleshopping network, it means a novel business activity that bringssustained revenue. A teleshopping network corresponds to the marketingchannel in conventional marketing. Its usually gets a good distributionmargin. And it usually manage the curtailing at a lower unit cost compare toconventional marketing. In teleshopping the only significant term of expenditure is the telecasting cost. So network saves a considerable amountout of the margin. It is also able to retain for itself a large portion of themargin.

Benefits the TV channel: finally, teleshopping benefits the TV channels aswell. For TV channels ,teleshopping is anew source of revenue. Doordarshanfor example allowed channeling for teleshopping by All’s network on a

profit sharing basis. DD gained a share from every item sold by the network.

TV channels, after all depend on commercial for their income. Theynaturally see teleshopping as an attractive source of income as it is totallycommercial.

Teleshopping in India:

Teleshopping ahs been gaining ground in India in a steady manner in recentyears. A variety of favorable factors have made it possible. In the first place,the relevant technologies have become available. Secondly, India is nowmore open to such marketing methods. Thirdly, TV chanels have multipliedenormously and TV as a medium has matured in the country, telecomeinfrastructure too has grown to some extent.

The changing socio-economic profile of the urban, upper- middleclass consumer in India has also been a contributing factor . this segementhas been showing interest in such alternatives to traditional method of shopping. It prefers to avoid the hassels of shopping in stores. Awarenessabout product has also been growing among this class of consumers. So is

impulse buying.





CHAPTER: 12

CUSTOMER RELATIONSHIP

MANAGEMENT





CUSTOMER RELATIONSHIP MANAGEMENT

Targeting, acquiring, and retaining the "right" customers is at the coreof many successful service firms Here, we emphasize the importance of carefully choosing target segments and taking pains to build and maintaintheir loyalty through well-conceived relationship marketing strategies.Underlying this strategy is the notion of market segmentation. More andmore firms are trying to decide which types of customers they can serve wellrather than trying to be all things to all people. Once a firm has woncustomers it sees as desirable, the challenge shifts to building relationships

and turning them into loyal customers who will generate a growing revenuestream for the firm in the future.

Building relationships is a challenge, especially when a firm hasmany, often millions, of customers who interact with the firm in many ways(from e-mail to call centers to face-to-face interactions). When implementedwell, customer relationship management (CRM) systems provide managerswith the tools to understand their customers and tailor their service, cross-selling, and retention efforts, often on a one-on-one basis.

Loyalty has been used in a business context to describe a customer'swillingness to continue patronizing a firm over the long term, purchasingand using its goods and services on a repeated and preferably exclusive

basis, and recommending the firm's products to friends and associates.However, brand loyalty extends beyond behavior to include preference, lik-ing, and future intentions..





CHAPTER: 13

IMPORTANCE OF

CUSTOMER LOYALTY





IMPORTANCE OF CUSTOMER LOYALTY

Why Is Customer Loyalty Important to a Firm’s Profitability?

How much is a loyal customer worth in terms of profits? In a classic study,researchers have analyzed the profit per customer in various service

businesses, categorized by the number of years that a customer had beenwith the firm. The researchers found that the longer customers remainedwith a firm in each of these industries, the profitable they became to serve.

Similar loyalty effects were also uncovered in the Internet context, where ittypically took more than a year to recoup acquisition costs and profitsincreased as customers stayed longer with the firm.

There are four factors working to the supplier's advantage to createincremental profits. In order of magnitude, these factors are

1. Profit derived from increased purchases.

Over time, business customers often grow larger and so need to purchasein greater quantities. Individuals may also purchase more as their familiesgrow or as they become more affluent. Both types of customers maydecide to consolidate their purchases with a single supplier that provideshigh-quality service.

2. Profit from reduced operating costs .

As customers become more experienced, they make fewer demands onthe supplier (for instance, less need for information and assistance ). Theymay also make fewer mistakes in operational processes, thus contributingto greater productivity.3. Profit from referrals to other customers .

Positive word-of-mouth recommendations are like free sales and

advertising, saving the firm from having to invest as much money inthese activities.

4. Profit from price premium .

New customers often benefit from introductory promotional discounts,whereas long-term customers are more likely to pay regular prices.





Moreover, when customers trust a supplier, they may be more willing to pay higher prices.

CHAPTER: 14

MANAGING CUSTOMER RELATIONS





MANAGING CUSTOMER RELATIONS

Targeting The Right Customers

Many elements are involved in creating long-term customer relationshipsand loyalty. The process starts by identifying and targeting the rightcustomers Whom should we be serving, is a question that every businessneeds to raise periodically Customers often differ widely in terms of needsand the value they can contribute to a company Not all customers offer a

good fit with the organization's capabilities, delivery technologies, andstrategic direction

1. Good Relationships Start with a Good Fit

If they want to build successful customer relationships, companiesneed to be selective about the segments they target. Matchingcustomers to the firm's capabilities is vital. Managers also need toconsider how well their product / service can meet the expectations of different types of customers. Finally, managers need to ask themselves whether their company can match or exceed competing

products / services that are directed at the same types of customers

The result of carefully targeting customers by matching the company'scapabilities and strengths with customer needs should be a superior

product / service offering in the eyes of those customers who valuewhat the firm has to offer “the result should be a win-win situation,where profits are earned through the success and satisfaction of customers, and not at their expense”.

2. Searching for Value, Not Just NumbersToo many service firms still focus on the number of customers theyserve - an important issue for operations and human resource planning- without giving sufficient attention to the value of each customer Generally speaking, heavy users buy more frequently and in larger volumes and are more profitable than are occasional users.





Relationship customers are by definition not buying commodityservices. Customers who buy based strictly on lowest price (aminority in most markets) are not good targets for relationship

marketing in the first place. These deal-prone customers continuallyseek the lowest price on offer

Acquiring the right customers can bring in long-term revenues,continued growth from referrals, and enhanced satisfaction fromemployees whose daily jobs are improved when they can deal withappreciative customers. Attracting the wrong customers typicallyresults in costly churn, a diminished company reputation, anddisillusioned employees. Marketers also need to recognize that somecustomers simply are not worth serving, because they are too difficult

to please or unable to decide on what they want.

3. Selecting an Appropriate Customer Portfolio

Artists and writers often prepare portfolios of their work to show to prospective purchasers or employers. The term portfolio alsodescribes the collection of financial instruments held by an investor.This concept of portfolio can be applied to businesses with anestablished base of customers. Like investments, some types of customers may be more profitable than others in the short term, but

others may have greater potential for long-term growth. Similarly, thespending patterns of some customers may be stable over time,whereas others may be more volatile – some customers tend to spendheavily in festive times. A wise firm may seek a mix of such segmentsin order to reduce the risks due to market or macroeconomic forces

Analyzing and Managing the Customer Base

Marketers should adopt a strategic approach to retaining, upgrading, and

even terminating customers. Customer retention involves developinglong-term, cost-effective links with customers for the mutual benefit of

both parties, but these efforts need not necessarily target all a firm'scustomers with the same level of intensity. Recent research hasconfirmed that most firms have several tiers of customers in terms of

profitability and that these tiers often have quite different expectationsand needs. According to Valerie Zeithami, Roland Rust, and Katharine





Lemon, it's critical that firms understand the needs of customers withindifferent profitability tiers and adjust their service levels accordingly.

Retaining, Upgrading, and Terminating Customers

Generally, customer tiers are based on not only profitability but alsoother identifiable characteristics common among these differentsegments. Instead of providing the same level of service to all customers,each segment receives a customized service level, based on itsrequirements and value to the firm. For example, the platinum tier willreceive some exclusive benefits not available to other segments. The

benefit levels for platinum and gold customers are often designed withretention in mind, because these customers are the ones that competitors

would like to entice to switch.

Marketing efforts can be used to encourage an increased volume of purchases, upgrading the type of service used, or cross-selling additionalservices to any of the four tiers. However, these efforts have a differentthrust for each of the tiers, reflecting their differing needs, usage

behaviors, and spending patterns. Among segments for which the firmalready has a high share of wallet, the focus should be on nurturing,defending, and retaining these customers, potentially via loyalty

programs.

Terminating customers comes as a logical consequence of therealization that not all existing customer relationships are worth keeping.Many relationships are no longer profitable for the firm, as they may costmore to maintain than the revenues they generate. Some customers nolonger fit the firm's strategy, either because it has changed or because thecustomers' behavior and needs have changed. Just as investors need todispose of poor investments and banks may have to write off bad loans,each service needs to regularly evaluate its customer portfolio and

consider terminating unsuccessful relationships. Legal and ethicalconsiderations, of course, will determine whether it is proper to take suchactions.





CHAPTER: 15

BUILDING CUSTOMER LOYALTY





BUILDING CUSTOMER LOYALTY

What makes customers loyal to a firm, and how can marketers increase their loyalty? This can be divided into the following

1. The Foundations of Customer Loyalty2. Creating Bonds with Customers3. Managing and Curtailing Drivers of Customer Defections

1. The Foundations of Customer Loyalty

The foundation for true loyalty lies in customer satisfaction

a. A delighted happy customer

As Tom Peters calls it, 'a customer that goes 'wow' when they dealwith an organization.' This is the kind of customer that will come

back, will tell their friends about their experience and will become anadvocate for the business - an unpaid salesperson

b. A satisfied customer

On the other hand, a satisfied customer is somebody whose

expectation is actually equal to their experience. It is not any better significantly, neither is it any worse- they are satisfied. However, thisdoes not seem to enter the customer's memory for any long period of time

c. A dissatisfied customer

This may be frustration, annoyance or impatience. It is simply definedwhere the experience of what you get as a customer is less than theexpectation. Many organizations are actually safe from extinction and

possible ruin because they havesuch low expectations with in their customers that their experience,whilst falling below many other standards, managed to escapedissatisfaction

2. Creating Bonds with Customers





Having the right portfolio of customer segments, attracting the rightcustomers and delivering high levels of satisfaction are a solid foundationfor creating customer loyalty. However, there is more that firms can do to"bond" more closely with their customers. At the same time, servicemarketers should be working to identify and eliminate the factors that resultin "churn," or the loss of existing customers and the need to replace themwith new ones.

a. Deepening the Relationship

To tie customers more closely to the firm, deepening the relationshipvia bundling and / or cross-selling is an effective strategy. For example, banks like to sell as many financial products into an accountor household as possible. Once a family has its current account, creditcard, savings account, safe-deposit box, car loan, mortgage, and so on,

with the same bank, the relationship is so deep that switching becomesa major exercise and is unlikely unless, of course, the customer isextremely dissatisfied with the bank.

b. Reward-Based Bonds

Within any competitive product category, managers recognize thatfew customers consistently buy only one brand, especially if service

delivery involves a discrete transaction (such as a car rental) rather than being continuous, (as with insurance coverage). In manyinstances, consumers are loyal to several brands while spurning others

—sometimes described as "polygamous loyalty" (not to be confusedwith variety

seeking, which results in consumers flitting butterfly-like from brandto brand, without any fixed allegiance at all). In such instances, themain goal becomes one of strengthening the customer's preference for

one brand over others.

c. Social Bonds

Have you ever noticed how your favorite hairdresser addresses you byname when you go for a haircut or asks why you haven't been in for along time and hopes everything went well when you were away on along business trip? Social bonds are typically based on personal





relationships between providers and customers. Alternatively, theymay reflect pride or satisfaction in holding membership in anorganization. Although social bonds are more difficult to build thanfinancial bonds and may require considerable time to achieve, theyare, for that same reason, also more difficult for other suppliers toreplicate for that same customer. A firm that has created social bondswith its customers has a better chance of retaining them for the longterm.

d. Creation of Customer Bonds through Membership Relationships

and Loyalty Programs

As a marketing strategy, many businesses seek ways to developformal, ongoing "membership" relations with customers Hotels, for instance, have developed "frequent-guest programs" offering priority

reservations, upgraded rooms, and other rewards for frequent guestsMany nonprofit organizations, such as museums, create membership

programs in order to reinforce the links with their most activesupporters, offering them such extra benefits as private showings andmeetings with curators or artists as a reward for annual donations Themarketing task here is to determine how to build sales and revenues(or, in the case of nonprofits, donations) through such "memberships,"while avoiding the risk of freezing out a large volume of desirablecasual business

3. Managing and Curtailing Drivers of Customer Defections

So far, we have discussed drivers of loyalty and strategies to tiecustomers more closely to the firm An alternative approach is tounderstand drivers of customer defections, or churn, and work oneliminating or reducing those drivers For example, in the mobile phoneindustry, players regularly conduct "churn diagnostics" the analysis of data warehouse information on churned and declining customers, exit

interviews (call center staff often have a short set of questions they ask when a customer cancels an account, to gain a better understanding of why customers defect), and in-depth interviews of former customers by athird-party research agency, which typically yield a more detailed under-standing of churn drivers





Common Churn Drivers Many surveys have been carried out over recent years to try to understand

why customers defect. While the answers may vary by customer andorganization, survey after survey highlights similar trends and reasons

(a) PriceWhile it may be important in attracting new customers, it would seemthat it is a minor issue in developing loyalty and retaining customers.Most research in this area, though varying by industry and country, rarely

puts price at more than 15 per cent as the reason for switching suppliersor business

(b) Physical factorsSuch physical factors as a 'more convenient location' are also rankedquite low, as are competition action and invention. Marketing andcompetitor activity and a relationship with a competitor are about 15 per cent. The competitor product's advantages can often account for thefurther 10 to 15 per cent

Customer sophistication

Customers not only expect and demand more they are also articulate insaying so. Twenty years of dramatic social change in housing, lifestyle,education, travel, etc. have changed the way many of us select the

business we use.

(c) ComplexityBuying even the simplest product or service can, if the customer wishes,

be a very complex decision-making process. The blurring of differences between brands, products and companies, the dynamic interaction between a product and the level of service behind it, both during a saleand afterwards, make it difficult to isolate buying motivations and criteria

(d) CompetitionIn almost every market in every developed country of the world,competition has increased dramatically in the last ten years.Globalization, advanced manufacturing technology and many other





factors has led to business becoming faster, having a higher quality, being quicker to innovate and being more price-competitive etc

(e) CostsCost has significant role to play in understanding the economic trendsand changes of recent years. The economic downturn of the early ninetiesgave both the business customer and personal consumer a sharp jab in theribs to remind them that markets can indeed go down as well as up. Theexperience and the lingering memory of it has made us all more aware of cost, the value of managing cost, and the importance of getting greater value for money when purchasing and choosing suppliers

(f) IndifferenceOne of the most common and significant reasons for customer switching

and disloyalty is the indifference and inattention of the business - fromthe customer's point of view, the lack of any reason to stay. Most surveyshighlight poor service as a more common reason for switching suppliersthan price advantage. This can also be supported by the generalobservations of marketing specialists, who detect the following changesin consumer and business purchasing behavior

If we look in more detail at what is meant by 'indifference', both throughthe research statistics and our own experience, it becomes clear that thereare many critical aspects behind any customer defection, including

Too little contact

Too little individual attention

Poor quality attention-especially problem are encountered

Generally poor service levels and standards

In non-commercial organizations or utility providers, where changingsupplier or switching business is more difficult, these four factors areoften at the root of the majority of complaints.





CHAPTER: 16

Questionnaire when

conducting a direct

marketing exercise:





Questionnaire when conducting a direct marketing exercise:

It is important to ask yourself these questions:

-What's the product's benefit to the consumer?

-what need or desire does the product fill?

-whether you emphasized that benefit in the direct marketing clearly and in astrong way?

-How is your product superior to that of your competitors?

-Is it higher quality?Less expensive? More convenient to buy or use?

-Is it one of a kind? And whether you stressed on those advantages or conveniences in the direct marketing as reasons for consumers to come toyou instead of to a competitor?

-Does the product have a season or a window of opportunity in which themost purchases are likely to occur? An example would be snow skis, boatsor lawnmowers. And whether you timed your direct marketing properly soyou didn't miss the season?

After having answered all the above questions, you must consider all theinformation gained and then think about the ideas below for future directmarketing campaigns:Include a testimonial or indicate references from satisfied customers in the

direct marketing piece.Repeat the direct marketing exercise. You need to beconsistent in your advertising whatever form of media you use.





CHAPTER: 17

AMWAY-THE SUCCESS

STORY





Amway India, a wholly owned subsidiary of Amway Corporation, wasestablished in August 1995 after approval by India's Foreign InvestmentPromotion Board (FIPB). Amway India commenced commercial operationson May 5, 1998 and is now the largest Direct Selling FMCG Company. TheCompany is headquartered at the National Capital Region of India - NewDelhi.

Amway has invested in excess of US $ 35 million (Rs. 151 crore) in India of this; US $ 6 million (Rs. 26 crore) is in the form of direct foreigninvestment. Amway India has 400 full time employees and has generatedindirect employment for 1,650 persons at all the contract manufacturer locations.

Amway India provides free and unlimited training to all its distributors tohelp them grow their business. Amway India conducted over 34,000 trainingsessions during in the past 12-months with an attendance of over 1.5 millionAmway Business Owners and prospects.





Amway India is a member of the Indian Direct Selling Association (IDSA).The IDSA is an industry regulatory body, with several reputedinternational and Indian Direct Selling companies as members. AMumbai-based consumer rights activist, Asha Kidnani, is IDSA’s

Ombudsman & Code Administrator. Amway India is also a member of the Confederation of Indian Industries (CII) and Federation of IndianChambers of Commerce (FICCI).

Sales Data

Known Sales Data

Year Wholesale Sales (IRP)

1999 0.99 million

2000 2,48 million

2001 5,53 million

2002 6,26 million

2003 5,79 million

2004 6,36 million

2005 6,33 million

2006 7,68 million





2007 7,99 million

2008 11,28 million

2009 14,07 million

IT pens Amway India’s direct marketing success story

Amway India is using state-of-the-art technologies to ensure that all businessinformation is available in real-time and all Amway offices and distributorsare connected anytime, all the time

Efficient information system is the heart of Amway operations. Theobjective of all our IT initiatives is to ensure that we have a strong heart to

support other organs by providing real time information any time, any place

Amway’s long-term IT vision and the deployment of relevant informationtechnology systems to make communication real-time, has enabled it toimplement an effective business model

For Amway India the Rs 553 crore subsidiary of US-based $5 billionAmway Corporation, Information Technology has played an integral part inmaking it one of the biggest success stories in the direct marketing space inthe country. With 45 offices and 3.10 lakh active distributors (apart fromother distributors), and third-party contract manufacturers spread across thecountry, contemplating operations without an effective automated systemwas an unthinkable task for the company’s management.

The company’s state-of-the-art IT infrastructure has prompted Rajeev Arya,director, information technology & business systems, Amway IndiaEnterprises, to call it a “mini technology company.” What makes thecompany worthy of this title is not just its strategic IT vision, but also itsintrinsic technology strength. The fact that Amway has a 25-member IT





team, and that almost 60-70 percent of its total capital investment is directedtowards funding IT initiatives, is proof that IT is serious business at Amway.

IT Vision

Amway’s direct selling business model, warranted the need for in-houseexpertise. In this, the company was fortunate enough to leverage thetechnology expertise of its parent company. This gave the company a strongfoundation to build upon. Ever since it set up operations in 1988, Amwayhas stressed on the importance of IT. The early hardware systems and IT

processes including the indigenously developed ERP system were part of the

package acquired from the parent company. With the initial systems in placeAmway went on to fortify it, with one vision in mind “Networked for the21st century.”

According to Arya, the need for a robust IT system was imminentconsidering the nature of Amway’s work processes. Under the direct-sellingmodel, the company has a chain of distributors, vertically as well ashorizontally, selling its products. Since one distributor cannot sell all the

products, he sponsors another who is below him on the chain. In Amway’sdistribution system, the chain can go as deep as possible. Furthermore, the

benefit of every sale happening down the line goes to each level of the topline, on the basis of a certain formula. These sales have to be tracked on amonthly basis as the points achieved have to be reimbursed by the month-end itself, and cannot be carried over to the next month.

What makes the managing of such a system aHerculean task is the sheer spread of the businessoperations. With over three lakh activedistributors, the chain ripples as low as the 100thand 1000th level in the system, furthermore the

person could be based anywhere in the country.“There is a lot of complexity involved in tracking

the sales and accounts of each of the distributors at every level of the chain,





as the sum due at each level is calculated on the basis of volumes generated by the distributor, as well as all his down lines,” explains Arya.

Amway’s long-term IT vision and the deployment of relevant informationtechnology systems to make communication real-time, has enabled it toimplement an effective business model. According to Arya, “Amway Indiais using state-of-the-art technologies to ensure that all business informationis available in real-time and all Amway offices and distributors areconnected anytime, all the time.” This, in fact, is the mission statementguiding the choice of IT systems (hardware and software), applications rightfrom ERP, Interactive Voice Response System (IVRS), SMS, disaster recovery management and e-business, VoIP and the advancedcommunication system.

Other systems

• Complaint Management System (CMS): CMS is another in-housedeveloped Lotus Domino-based package, integrated to the backend.Once the complaint or request is logged, it is assigned to anappropriate assignee. A mail notification with the details of thecomplaint/request goes to the assignee. Arya says this is a three levelescalation process. After the call has been addressed, it goes into theknowledge management database, which generates a report stating the

average resolution time taken per call. This system is aimed atanalysing performance with regard to customer service in terms of themost frequent mistakes, time taken to resolve a complaint, and reasonsfor delay. All this ultimately results in improved customer serviceresponse, adds Arya.

• Interactive Voice Response System (IVRS): This round the clock service provides complete business information such as productinformation, new launches and promotions, addresses and contactinformation and most importantly tracks Amway’s reward points

system. This service is available over the phone to any Amwaydistributor in India. However, currently only the national capitalregion can access it as a local call. But the overwhelming responsethat the company has received, coupled with some regulatoryrelaxations, has prompted it to soon extend the service to other locations through a service provider. Amway is in talks with variousservice providers for making IP voice calls.





• Short Messaging Service (SMS): Through this service, Amway Indiais leveraging on SMS to provide critical information to its distributors“any time, anywhere” on their mobile phones. Amway charges itsdistributors a minimum amount each month for this service. The

business information messages are delivered to the distributorsautomatically using the push technology. As a result, the top line isalways informed of the happenings down the line. In order to providethe service, the company has tied up with CellNext as the applicationservice provider. Elaborating on how the backend works, Aryaexplains that CellNext has tied up with most of the cellular service

providers, which enables it to deliver the service to almost all of Amway’s distributors. The software package for this system has beendeveloped in-house.

• Disaster Recovery Management: With so much dependence on

technology for efficient day-to-day operations, disaster recoveryforms an imminent part of the company’s IT systems. Currently, alllocations connect to the central site at Delhi. In order to deal with theeventuality of any disaster, the company has developed a disaster recovery system. A complete copy of its current production set-up has

been housed at its disaster recovery location at Mumbai.

A well-defined standard operating procedure has been put in place to dealwith a disaster. These processes are audited and validated from time-to-time.Every quarter, there is a simulation of the disaster and its results aredocumented. This exercise is also aimed at identifying areas of improvement. The aim of disaster recovery management system is, as Arya

puts it, to restore normal business operations within 48 hours of a disaster striking the central site at Delhi.

Heading towards e-business

According to Arya, Amway India has a three-phase approach for foraying

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





business operations. The third phase will allow the distributors to conducttheir business online.

Taking consideration of the increased security requirements with theintroduction of e-commerce, Amway’s servers will be in militarised zone,whereby nobody will be able to talk to the iSeries directly. To avoidhacking, only the proxy server will talk to the iSeries server. Theimplementation of third phase is estimated to be completed by end of 2002or early 2003.

The company is currently deliberating upon using IBM’s Web commercesuite or opting for an in-house software package. Amway wants to leveragethe Internet as an additional channel for its distributors, as well as to createsynergies in its operations.

• Communication Systems: The communication system forms thedigital nervous system of the company, as it provides connectivity toall 49 Amway offices and warehouses across the country. It enablesusers to connect to the iSeries and other services for their day-to-dayoperations. All locations are connected with the head office throughAmway’s wide area network (WAN) based on VSATs, leased linesand VPN having an uptime of 99 percent. “With the kind of communication requirements that the company has, it is very criticalto have dependable and cost-optimised links. Taking the orders and

billing invoices is on a day-to-day basis and we cannot afford anydowntime.”

The company has evolved a very intelligent communication and networkingstrategy, which enables both efficiency and cost optimisation. Amway Indiahas established leased line as the primary link, which offers 64 Kbps of

bandwidth. VSATs, on the other hand, have been established as thesecondary link. As a result, the secondary link takes over if the primary link is down through the implementation of cross-over switch.

On the VSATs front, Amway has judiciously partnered with HCL Comnetand Hughes Escorts Communications. According to Arya, the challenge herelies in managing the large number of communication links and the hugenumber of users (over 1000), which makes management of the infrastructurea complex task. The company has also got a couple of Virtual Private

Networks in place, as they provide for a thicker channel for connectivity.





• Voice over Internet Protocol (VIP): Amway leverages its existingleased line infrastructure to allow users to make toll free long distancetelephone calls between Amway offices. At present, it is available at12 locations. According to Arya, the company has been able to saveabout $1,600 for a talk time of 9,300 minutes across the 12 locationsover a period of two months. To leverage on more cost savings thecompany will be extending the VIP facility to additional 35 locations

by September 2002.

MIS: The IT team has developed an internal decision support system byusing technologies similar to data warehousing and data mining. The MIStracks various areas like taxation, trend analysis, financial, inventory, stock movement reports, information by regions. For instance, the marketingwould like to track down the sales of various categories of products, by

business line, regions, periods to analyse and understand the emerging patterns





CHAPTER: 18

Avon - A Direct Marketing

Review





Avon - A Direct Marketing Review

Working from home and developing their own direct marketing small business is an idea many Americans are looking to engage in. Are youlooking to work from home and make an unlimited amount of money?Certainly you have heard of Avon; a very large company and still growing.They are one of the fastest growing direct marketing companies in over 135counties; even growing fast in China and Russia.

Founder, David H. McDonnell, gave up selling books when the perfume hegave female customers became more popular than his novels. Because of this, in 1886 he started his own small business, California PerfumeCompany, by direct marketing the same perfume. But before long he knewthat he needed to hire a representative, Mrs. Albee. Avon. To this day shehas over 5 million representatives and still hiring representatives.

Many entrepreneurs are looking for a company with excellent products thatare easy to sell. As a direct marketing company, Avon uses door to door

sales, catalogs and the internet. Every distributor is given a website for their guests to visit and place orders; thus making sales more abundant. You toocan become a representative, work from home and own your own small

business while learning how to use direct marketing to your favor. You willmeet many new people in your neighborhood and even in your community.Don't you want to own your own small business and work from home?





As an Avon representative, you will need to have the ability to sell thecosmetics and perfume, not to mention all the other products available.Becoming a trained Avon Beauty Advisor is a better way to make moneythan being a representative for a couple of reasons.

First, as a trained Avon Beauty Advisor you have the credentials backingyou. In today's economy and society, people love credentials. If you have

been trained by Avon, then you know what you are talking about whichmakes your customers trust you and feel like they have their own personal

beauty advisor. Who doesn't want a beauty advisor?

The next reason is the ability to recruit people to become representatives andtrained Avon Beauty Advisors. When you meet a successful entrepreneur,don't you want to find out what they are doing to have financial freedom? If

you were offered the same opportunity to create the same kind of success,wouldn't you give it a shot? Skeptic or not, the curiosity is brewing insideand to answer that curiosity, you need to give it a try.

As with any direct marketing business, Avon is a huge commitment andtakes time to build a small business. This is an actual work from homeopportunity with a very real potential to make money. You need to design,develop, and distribute your own flyers; in addition to purchasing samples,cards, bags, and whatever else it takes to make sure your customers have anawesome Avon experience.





CHAPTER: 19

Eureka Forbes: Friend for

Life





Eureka Forbes: Friend for Life





Brand: Eureka Forbes

Company: Shahpoorji Pallonji group

Agency: Triton


http://www.oxyshopping.com/search/ref/?id=111821




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

It dates back to 1982, when health ambassadors from Eureka Forbes, with a

new concept of living in a clean environment and drinking water in its purestform knocked on your door! They called themselves friends for life and they

proved that they indeed were. Eureka Forbes continues to be the best friendin an Indian Household even after two decades and the sentiments have notchanged.

Eureka Forbes is a part of the Shapoorji Pallonji Group and today it is a 12 billion INR, multi product and multi channel corporation. Incepted in 1982,we have put 28 years of consolidated efforts to become the undisputedleaders in domestic and industrial Water Purification Systems, VacuumCleaners, Air Purifiers & Security Solutions. Being Asia’s largest directsales organization, our force of 7000 direct personnel touches 1.5 millionhomes. We have one of the largest networks catering to more than 131 citiesand 398 towns across the country! We also have a 10,000 strong dealer salesnetwork and over 58 distributor strong Industrial Sales Network.

Dedicated to the cause of providing healthier living, today, we havesuccessfully established ourselves as a business super-brand and our dedicated team works around the clock to make your lives healthier and

more secure! We strive to provide the best after sales service and to achievethe same we have over 1500 service centers and as many as 4500 companytrained technicians who visit over 20,000 Indian kitchens daily!

Our efforts have borne us fruits in the form of the numerous awards that wehave received from time to time:

• Winner of 6 prestigious UNESCO Water Digest Awards 2009-10.

• Winner of the Frost & Sullivan Award for the Best Company from the

domestic point of use, Water treatment systems and Customer ServiceLeadership Award.

• We have been ranked amongst India's Most Admired Consumer Durable Companies.

• Awarded Best Employers 4 times in a row.





• Winner of 'Most Admired Knowledge Enterprise' MAKE- AsiaAwards.

BUSSINESS PRACTICE

The customer is the sole focus of our business. We constantly direct all our efforts to towards achieving maximum customer satisfaction by delivering

products and services to the best value and quality.

We strive to honor our commitments, implied or expressed to both our internal and external customers.

We stress on integrity, transparency and consistency in all our dealings. Wealways strive to have trusting, mutually beneficial and long-lastingrelationship with out business associates. We seek to maintain a warm,

positive and friendly work environment where everyone shares a mutualfeeling of respect for each other. We encourage teamwork, motivate andtrain our people to perfect their skills for the benefit of the individual and theorganisation. We set, communicate and pursue clear operational guidelinesand business strategies. We empower people at appropriate levels to achievetheir goals. We recognize and reward merit and performance. We strive to

make the organisation a responsible corporate citizen.





CHAPTER: 20





Case Study of Eureka

Forbes

Critical Analysis of Success of Water Purifier Industry aCase Study of Eureka Forbes Ltd, India by Anubhav

Singh

in Business /Customer Service ( submitted 2010-03-01)

Summary

Water Purifiers as a segment has seen a lot of activity in the last few yeas. Ithas seen the entry of many new players has entered into this business

Eureka Forbes followed the globally 'tried and tested' direct selling route for marketing its products in India, thus becoming one of the first direct sellingcompanies in India. The company believed that its core strength was its

people. The case let provides details about the company's advertisingstrategy that projected a friendly and trustworthy image of its salespersons.It discusses the Customer Relationship Management (CRM) initiatives of

Eureka Forbes. Finally, it analyzes the change in advertising strategy and positioning by Eureka Forbes. Eureka Forbes Targeted at the upper middleclass families, these products were never considered a priority. Since most of the middle class families could afford a maid, it was a fight between Maidand the Machine.


http://www.goarticles.com/cgi-bin/search.cgi?c=5&title=Business

http://www.goarticles.com/cgi-bin/search.cgi?c=124&title=Customer_Service

http://www.goarticles.com/cgi-bin/search.cgi?c=5&title=Business

http://www.goarticles.com/cgi-bin/search.cgi?c=124&title=Customer_Service




Because of the low interest and since the product benefits needs to bedemonstrated to the customers, conventional distribution was not viable.Hence EFL chose the less traveled direct selling route. The Eureka Forbessales man was called Eurochamp. It was a tough job for these salesmen whohad to go through the "cold calls" to get a sale. At one point of time, becauseof the aggressive nature of these sales persons, people became scared even tolisten to these sales persons. Now this aggression has mellowed down to amore professional sales approach. EFL has also tried to position their sales

persons as problem solvers rather than sales officers. The campaigns tried to build the image of a Euro champ as a Friend rather than one that is after themoney. During the late eighties, a Eureka Forbes salesman was generic todirect selling.

This study is my first step to understand direct selling route.

Observation and Learnings

As a part of MBA curriculum I got tremendous experience from my college, but this dissertation increase my knowledge not only about direct salesmarketing as well as the whole concept of Marketing. Before starting this

project I also didn't know that complexity with the direct sales channels butafter that I observe that it is very important thing for marketer, product andcustomer also.

Direct selling company Eureka Forbes Ltd is eyeing a 10-12 per cent growthin sales during the current fiscal. The company will be appointing a new setof franchisees for its products, especially in smaller towns, and give morethrust on two of its fledgling divisions - electronic security systems andindustrial sales.

Eureka Forbes, a 60:40 joint venture between Forbes Gokak of the Tatas andElectrolux AB of Sweden, had clocked a turnover of Rs 390 crore for theyear to March 31, 2002.

The company, as of now, has 300 franchisees across the country and plans toappoint another 200 in the smaller cities where it is not present currently.





According to the product manager of Eureka Forbes, P Rajendran, theelectronic security systems and industrial sales divisions (both beganoperations frpm 1996) are both poised for growth this year as the company is

banking on the success of a slew of new launches and product upgradations.

"We hope to double our turnover in these two divisions this year," Mr

Rajendran said.

Eureka Forbes' industrial sales division reported a turnover of Rs 9 crore in2001-02 and has tied up with Danish industrial cleaning products giant

Nilfisk Advance Pte.

The division currently offers industrial vacuum cleaners, floor cleaners andhigh pressure water cleaners to customers in India.The company's other unit,

electronic security systems division, has a strategic partner in the Canada- based Digital Security Controls and offers products in intrusion detectionsystems, surveillance systems, access control and fire detection systems.

The products are all placed in the below Rs 10 lakh category to avoidconfrontation with another Tata group company Tata Honeywell. In itsdirect sales division, which accounted for Rs 290 crore of the company'stotal turnover of Rs 390 crore in 2001-02, the company is eyeing a salesfigure of 3.5 lakh units of water and air purifiers. The company sold 3 lakhunits of the same product last year.

Conclusion

This project focuses on direct marketing and success strategy of EurekaForbes and its fundamentals. I have tried to cover all related issues with theDirect marketing pioneer Each and every product has different Strategy andhas different use. In this project it is very easy to find different Strategy for different products and success strategy of Eureka Forbes through directmarketing channels.

In the analysis of questionnaire we can easily find Success Strategyimportance for an organization lf. In the questionnaire administration of EUREKA FORBES respond very well and took it very initiative.

In other hand we can see in the rapidly urbanizing world, friendly salesmanis substantial to obtain basic consumer goods. It is also important to satisfyconsumers' needs in an effective way. Direct marketing pioneer should





fulfill its function with a minimum overall resource use and its efficiencyoffers more service with less resource use. Especially at water purifier industry distribution, While players such as LG, BPL and Philips continue togather meagre volumes in this segment, Eureka Forbes believes in creating amarket for products which do not sell through dealers, especially vacuumcleaners, which need to be demonstrated to consumers. Mr Palekar pegs thevacuum cleaner market at Rs 120 crore with a growth rate of 10 per cent.

For instance, its latest offering is Euroclean Bullet, a compact vacuumcleaner with dyno-centric power while the yet-to-be-launched EurocleanUltima will provide steam-based technology. While the new models would

be locally manufactured through its group company Fal Industries Ltd, itimported its earlier models (Euroclean Swift and Euroclean Wet & Dry)from companies such as Align Machine Tools of Taiwan and Shop Vac of

the US.

However, according to Mr Rajeev Karwal, President, CETMA, the retailmarket for vacuum cleaners is not exactly growing. "Unlike the dry vacuumcleaners which come cheap, it is wet cleaning which works in India and themodels in this category are too steep." The whole analysis shows theimportance and its viability. Limitations

When I am going through this project there are some points that can saydrawbacks of this project -

- I had limitation to borrow information from their employees.

- I had limitation to borrow information from their system and data warehouse.

- I had limited information on internet that could be borrowed by us. Sothese are the main limitations that i can get from main constraints.





CHAPTER: 21





CONCLUSION

CONCLUSION

Direct marketing is probably the most personal form of marketing. Directmarketing is a way to communicate with a consumer while recognizing himas an individual. This type of marketing puts a face and a name to everyconsumer that receives direct mail marketing. It is something that anindividual can hold in his hand and examine for extended periods. Directmarketing helps establish a relationship with customer through business.

One can communicate various messages about the business to customer. In

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





Direct marketing can really boost activity for business. It is a great way to promote business and foster a relationship with the customer at the sametime.

Direct marketing is a form of marketing that attempts to send its messagesdirectly to consumers, without the use of intervening media. Directmarketing differs from regular advertising in that it does not place itsmessages on a third party medium such as a billboard or a radio commercialwould. Instead, the marketing of the service or commodity is pitched directlyat the consumer. Most direct marketing is done by companies whose onlyfunction is to manage and perform direct advertising, rather than by theadvertised entity itself. Direct marketers have been long time customers of computer databases, and they often have very sophisticated criteria of inclusion and exclusion in their mailing lists.

.Direct marketing is a sub-discipline and type of marketing. There are twomain definitional characteristics which distinguish it from other types of marketing. The first is that it attempts to send its messages directly toconsumers, without the use of intervening media. This involves commercialcommunication (direct mail, e-mail, and telemarketing) with consumers or

businesses, usually unsolicited. The second characteristic is that it is focusedon driving purchases that can be attributed to a specific "call-to-action." Thisaspect of direct marketing involves an emphasis on traceable, measurable

positive (but not negative) responses from consumers (known simply as"response" in the industry) regardless of medium.If the advertisement asks the prospect to take a specific action, for instancecall a free phone number or visit a website, then the effort is considered to

be direct response advertising.

I feel Direct Marketing is slowly but steadily taking over the other marketingtools as it is supported with more personalized approach. Especially in Indiawhere there is still a huge untapped consumer segments this type of marketing will work for all type of organizations and businesses. With theentrance of MNC’s from all over the world in the Indian market, it is thetime when Direct Marketing in India has reached to the internationalstandards. With less investment and huge response, I feel, Direct Marketingwill be soon the main marketing strategy for the small scale businesses aswell as the huge MNC’s and big organizations.


http://en.wikipedia.org/wiki/Marketing

http://en.wikipedia.org/wiki/Consumer

http://en.wikipedia.org/wiki/Mass_media

http://en.wikipedia.org/wiki/Toll-free_telephone_number

http://en.wikipedia.org/wiki/Direct_response_marketing

http://en.wikipedia.org/wiki/Marketing

http://en.wikipedia.org/wiki/Consumer

http://en.wikipedia.org/wiki/Mass_media

http://en.wikipedia.org/wiki/Toll-free_telephone_number

http://en.wikipedia.org/wiki/Direct_response_marketing




CHAPTER: 22

BIBLIOGRAPHY





BIBLIOGRAPHY

WEBSITES;

MANAGEMENTPARADISE.COM

GOOGLE.CO.IN

WIKIPEDIA.COM

www.EzineArticles.comexpert=Drake_Palmer

BOOKS;

DIRECT MARKETING BY SWATI M. SABALE.

MARKETING MANAGEMENT BY

V.S. RAMASWAMYAND

S.NAMAKUMARI.

MARKETING MANGEMNT BY TAPAN K PANDA.

step 5 final

Documents