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Other Media for Direct-Response Marketing

Direct marketers use all the major media. Newspapers and magazines carry ads offering books, clothing, appliances, vacations, and other goods and services that individuals can order via toll-free numbers. Radio ads present offers 24 hours a day. Some companies prepare 30- and 60-minute infomercials to combine the selling power of television commercials with the draw of information and entertainment. Infomercials promote products that are complicated or technologically advanced or that require a great deal of explanation. At-home shopping channels are dedicated to selling goods and services through a toll-free number or via the Internet for speedy delivery.

Customer Databases and Database Marketing

Some observers believe a proprietary customer database can provide a company with a significant competitive advantage.7 In general, companies can use their databases in five ways for direct marketing:

  • 1. To identify prospects—Many companies generate sales leads by advertising their product or service and including a response feature, such as a link to a home page, a business reply card, or a toll-free phone number, and building a database from customer responses. The company sorts through the database to identify the best prospects, then contacts them by mail, e-mail, or phone to try to convert them into customers.
  • 2. To decide which customers should receive a particular offer—Companies interested in selling, up-selling, and cross-selling set up criteria describing the ideal target customer for a particular offer. Then they search their customer databases for those who most closely resemble the ideal. By noting response rates, a company can improve its targeting precision.
  • 3. To deepen customer loyalty—Companies can build interest and enthusiasm by remembering customer preferences and sending appropriate gifts, discount coupons, and interesting reading material.
  • 4. To reactivate customer purchases—Automatic mailing programs (automatic marketing) can send out birthday or anniversary cards, holiday shopping reminders, or off-season promotions.
  • 5. To avoid serious customer mistakes—Capturing all transactions and communications in a customer database can save companies from mistakes such as making conflicting offers to one customer and not providing proper service to good customers.

On the other hand, five main problems can prevent a firm from effectively using database marketing. [1]

consumers’ private information. The European Union passed a law handicapping the growth of database marketing in its 27 member countries.

5. The assumptions behind CRM may not always hold true.8 High-volume customers often know their value to a company and can leverage it to extract premium service and/or price discounts, so it may not cost the firm less to serve them. Loyal customers may also be jealous of attention lavished on other customers and may not necessarily be the best ambassadors for the brand.

Public and Ethical Issues in Direct Marketing

Direct marketers and their customers usually enjoy mutually rewarding relationships.

Occasionally, however, a darker side emerges. Many people don’t like hard-sell direct marketing solicitations or unwanted junk mail. Some direct marketers take advantage of impulsive or less sophisticated buyers, prey on the vulnerable, or design mailers and copy to mislead. Critics worry that marketers may know too much about consumers’ lives and they may take unfair advantage.9 However, most direct marketers want what consumers want: honest and well-designed marketing offers targeted only to those who appreciate receiving them.

  • [1] Some situations are just not conducive to database marketing. Building a customer databasemay not be worthwhile when: (1) the product is a once-in-a-lifetime purchase (a grand piano);(2) customers show little loyalty to a brand (there is a lot of customer churn); (3) the unit sale isvery small (a candy bar) so customer lifetime value is low; (4) the cost of gathering information istoo high; and (5) there is no direct contact between the seller and ultimate buyer. 2. Building and maintaining a customer database require a large investment. Computerhardware, database software, analytical programs, communication links, and skilled staff canbe costly. It’s difficult to collect the right data, especially to capture all the occasions of companyinteraction with individual customers. 3. Employees may resist becoming customer-oriented and using the available information.Employees find it far easier to carry on traditional transaction marketing than to practice CRM.Effective database marketing requires managing and training employees as well as dealers andsuppliers. 4. Not all customers want a relationship with the company. Some may resent knowing thecompany has collected that much personal information about them. Online companies shouldexplain their privacy policies and give consumers the right not to have their informationstored. European countries do not look favorably on database marketing and are protective of
 
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