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 low-budget 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 communications are sent to customers using the postal service. The term direct mail is used in the direct marketing industry to refer to communication deliveries by the Post Office, which may also be referred to as "junk mail" or "admail" or "crap mail" and may 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 to consumers' mailboxes by delivery services other than the Post Office. Bulk mailings are a particularly popular method of promotion for businesses operating in the financial services, home computer, and travel and tourism industries.
In many developed countries, direct mail represents such a significant amount of the total volume of mail that special rate classes have been established. In the United States and United Kingdom, for example, there are bulk mail rates that enable marketers to send mail at rates that are substantially lower than regular first-class rates. In order to qualify for these rates, marketers must format and sort the mail in particular ways – which reduces the handling (and therefore costs) required by the postal service.
Advertisers often refine direct mail practices into targeted mailing, in which mail is sent out following database analysis to select recipients considered most likely to respond positively. For example a person who has demonstrated an interest in golf may receive direct mail for golf related products or perhaps for goods and services that are appropriate for golfers. This use of database analysis is a type of database marketing.
There are a number of direct marketing media other than direct mail. These include (and are by no means limited to):
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 centre’s.
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 has registered themselves on the list. After the list had operated for one year, over 62 million people had signed up. The telemarketing industry opposed the creation of the list, but most telemarketers have complied with the law and refrained from calling people who are on the list.
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 point, and 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 providers have developed increasingly effective E-Mail Filtering programs. These filters can interfere with the delivery of email marketing campaigns, even if the person has subscribed to receive them, as legitimate email marketing can possess the same hallmarks as spam.
Door to Door Leaflet Marketing
Leaflet Distribution services are used extensively by the fast food industries, and many other business focussing on a local catchment Business to consumer business model, similar to direct mail marketing, this method is targeted purely by area, and costs a fraction of the amount of a mail shot due to not having to purchase stamps, envelopes or having to buy address lists and the names of home occupants.
Broadcast Faxing
A fourth type of direct marketing, broadcast faxing, is now less common than 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 the ubiquity of email marketing, and the expense of direct mail and telemarketing, voicemail marketing presented a cost effective means by which to reach people with the warmth of a human voice.
Abuse of consumer marketing applications of voicemail marketing resulted in an abundance of "voice-spam", and prompted many jurisdictions to pass laws regulating consumer voicemail marketing.
More recently, businesses have utilized guided voicemail (an application where 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. An example is a coupon which the reader cuts out and presents to a super-store check-out counter to avail of a discount. Coupons in newspapers and magazines cannot be considered direct marketing, since the marketer incurs the cost of supporting a third-party medium (the newspaper or magazine); direct marketing aims to circumvent that balance, paring the costs down to solely delivering their unsolicited sales message to the consumer, without supporting the newspaper that the consumer seeks and welcomes.
Direct Response Television Marketing
Direct marketing on TV (commonly referred to as DRTV) has two basic forms: long form (usually half-hour or hour-long segments that explain a product in detail and are commonly referred to as infomercials) and short form which refers to typical 0:30 second or 0:60 second commercials that ask viewers for an immediate response (typically to call a phone number on screen or go to a website).
TV-response marketing—i.e. infomercials—can be considered a form of direct marketing, since responses are in the form of calls to telephone numbers given on-air. This both allows marketers to reasonably conclude that the calls are due to a particular campaign, and allows the marketers to obtain customers' phone numbers as targets for telemarketing. Under the Federal Do-Not-Call List rules in the US, if the caller buys anything, the marketer 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 Group then cross-sell, and up-sell to these respondents.
One of the most famous DRTV commercials was for Ginsu Knives by Ginsu Products, Inc. of RI. Several aspects of ad, such as it's use of adding items to the offer and the guarantee of satisfaction were much copied and came to be considered part of the formula for success with short form direct response TV ads (DRTV)
Friday, October 9, 2009
Direct Marketing
What is Direct Marketing?
There are two main definitional characteristics which distinguish it from other types of marketing. The first is that it attempts to send its messages directly to consumers, without the use of intervening media. This involves commercial communication (direct mail, e-mail, and telemarketing) with consumers or businesses, usually unsolicited. The second characteristic is that it is focused on driving a specific "call-to-action." This aspect of direct marketing involves an emphasis on track able, measurable positive (but not negative) responses from consumers (known simply as "response" in the industry) regardless of medium.
Direct marketing addresses some of the biggest challenges in marketing a business - lead generation, converting those leads into high quality customers, and then systematically growing customer profitability. Marketing experts estimate that your prospects and customers are bombarded with more than 3000 marketing messages (direct mail, email marketing, radio/TV advertising, billboards) – every day. Direct marketing helps you get through the ‘marketing noise’, and delivers a high return on investment for your marketing spend.
With prospects being presented with so many choices, they seldom, if ever, buy at the first contact. In fact, it can take anything from 9 to 15 contacts before they have sufficient trust in you to finally buy your product.
Little wonder that so many entrepreneurs and sales people hate cold calling as the chances of early success are dismally low.
An alternative to the pain of cold calling is a consistent set of processes that attracts qualified leads to your business, and then keeps them ‘in the loop’ until they convert into customers.
Systematic Direct Marketing is that set of processes - a marketing strategy based on direct marketing methods which will deliver an immediate and sustainable sales improvement.
By improvements we mean:
•your lead generation costs will drop,
•converting leads into sales will not be due to profit-killing price discounts, and
•your quality clients will form enduring relationships - providing you with profitable repeat sales
The Highly Effective Cycle of Systematic Direct Marketing
In order to attract, retain and nurture a list of highly profitable customers, you need to craft your direct marketing strategy around a number of marketing activities that can start in a fairly simple way, but over time develop into a fairly sophisticated set of direct marketing processes.
If you cycle through the following direct marketing activities you will experience an unprecedented improvement in your business’s results:
Each direct marketing cycle will create a set of clients who can start providing you with referrals. These ‘lowest cost’ prospects will supplement the prospects that you attract through your normal ongoing lead generation techniques, yielding an ever-increasing prospect base for you to convert into customers.
Benefits and Pitfalls in Direct Marketing
Direct marketing is known for an effective marketing strategy for many reasons
1. Direct marketing is very effective if you want a way to connect and interact with your prospective clients during your sales and marketing cycle. It helps you establish a direct relationship with your target customers.
2. Direct marketing allows your postcard printing pieces, for example, to generate awareness of your business among your target clients.
3. Direct marketing allows you to build a qualified and potential database for your business.
4. It helps your business to encourage recognition and loyalty, as well as trust from your prospective customers because direct marketing allows you to develop an effective and responsive feedback system.
5. It also helps you gather concrete information that can provide you evidence of the effectiveness of your marketing medium, such as your postcard printing project.
6. And because you actually connect with your prospective clients promptly, your direct marketing campaign (e.g. postcard printing) generates excitement over your products and services. It encourages your potential clients to value your business in terms of providing solutions to their unique individual needs. And your marketing campaign doesn’t have to include discounts or price cuts; your direct marketing campaign helps your target readers to simply see the value of having your kind of business in their lives.
Most of all, your direct marketing campaign helps you generate leads and manage them as well. More than getting sales leads for your business, maintaining your current database also needs constant work and effort. An effective direct marketing starts with a stable database. You need a solid system to manage all your new leads, as well as your loyal ones
Direct marketing does have some negative aspects, however. Many people are unaware of how the personal information they include on an order form or survey may be used for targeted advertising later. One prevailing philosophy in direct mailing circles is the idea that if a customer orders a swimsuit from a clothing catalog, he or she might naturally be interested in swimming pool supplies or exercise equipment as well. This could lead to direct marketing overload, as potential customers and clients become overwhelmed with catalogs, unsolicited emails and unwanted phone calls. There is also the concern that personal information collected by legitimate direct marketing agencies could be purchased by unscrupulous or shady companies for the express purpose of fraud.
There are two main definitional characteristics which distinguish it from other types of marketing. The first is that it attempts to send its messages directly to consumers, without the use of intervening media. This involves commercial communication (direct mail, e-mail, and telemarketing) with consumers or businesses, usually unsolicited. The second characteristic is that it is focused on driving a specific "call-to-action." This aspect of direct marketing involves an emphasis on track able, measurable positive (but not negative) responses from consumers (known simply as "response" in the industry) regardless of medium.
Direct marketing addresses some of the biggest challenges in marketing a business - lead generation, converting those leads into high quality customers, and then systematically growing customer profitability. Marketing experts estimate that your prospects and customers are bombarded with more than 3000 marketing messages (direct mail, email marketing, radio/TV advertising, billboards) – every day. Direct marketing helps you get through the ‘marketing noise’, and delivers a high return on investment for your marketing spend.
With prospects being presented with so many choices, they seldom, if ever, buy at the first contact. In fact, it can take anything from 9 to 15 contacts before they have sufficient trust in you to finally buy your product.
Little wonder that so many entrepreneurs and sales people hate cold calling as the chances of early success are dismally low.
An alternative to the pain of cold calling is a consistent set of processes that attracts qualified leads to your business, and then keeps them ‘in the loop’ until they convert into customers.
Systematic Direct Marketing is that set of processes - a marketing strategy based on direct marketing methods which will deliver an immediate and sustainable sales improvement.
By improvements we mean:
•your lead generation costs will drop,
•converting leads into sales will not be due to profit-killing price discounts, and
•your quality clients will form enduring relationships - providing you with profitable repeat sales
The Highly Effective Cycle of Systematic Direct Marketing
In order to attract, retain and nurture a list of highly profitable customers, you need to craft your direct marketing strategy around a number of marketing activities that can start in a fairly simple way, but over time develop into a fairly sophisticated set of direct marketing processes.
If you cycle through the following direct marketing activities you will experience an unprecedented improvement in your business’s results:
Each direct marketing cycle will create a set of clients who can start providing you with referrals. These ‘lowest cost’ prospects will supplement the prospects that you attract through your normal ongoing lead generation techniques, yielding an ever-increasing prospect base for you to convert into customers.
Benefits and Pitfalls in Direct Marketing
Direct marketing is known for an effective marketing strategy for many reasons
1. Direct marketing is very effective if you want a way to connect and interact with your prospective clients during your sales and marketing cycle. It helps you establish a direct relationship with your target customers.
2. Direct marketing allows your postcard printing pieces, for example, to generate awareness of your business among your target clients.
3. Direct marketing allows you to build a qualified and potential database for your business.
4. It helps your business to encourage recognition and loyalty, as well as trust from your prospective customers because direct marketing allows you to develop an effective and responsive feedback system.
5. It also helps you gather concrete information that can provide you evidence of the effectiveness of your marketing medium, such as your postcard printing project.
6. And because you actually connect with your prospective clients promptly, your direct marketing campaign (e.g. postcard printing) generates excitement over your products and services. It encourages your potential clients to value your business in terms of providing solutions to their unique individual needs. And your marketing campaign doesn’t have to include discounts or price cuts; your direct marketing campaign helps your target readers to simply see the value of having your kind of business in their lives.
Most of all, your direct marketing campaign helps you generate leads and manage them as well. More than getting sales leads for your business, maintaining your current database also needs constant work and effort. An effective direct marketing starts with a stable database. You need a solid system to manage all your new leads, as well as your loyal ones
Direct marketing does have some negative aspects, however. Many people are unaware of how the personal information they include on an order form or survey may be used for targeted advertising later. One prevailing philosophy in direct mailing circles is the idea that if a customer orders a swimsuit from a clothing catalog, he or she might naturally be interested in swimming pool supplies or exercise equipment as well. This could lead to direct marketing overload, as potential customers and clients become overwhelmed with catalogs, unsolicited emails and unwanted phone calls. There is also the concern that personal information collected by legitimate direct marketing agencies could be purchased by unscrupulous or shady companies for the express purpose of fraud.
Grey Market
What is Grey or Gray Market?
•A grey market is a market where a product is bought and sold outside of the manufacturers authorized trading channels.
•Grey market is an unofficial market in which goods are bought and sold at prices lower than the official price set by a regulatory agency
•A grey market or gray market is the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer. In contrast, a black market is the trade of goods and services that are illegal in themselves and/or distributed through illegal channels, such as the selling of stolen goods, certain drugs or unregistered handguns.
Description of Grey Market
Unlike black market goods, grey-market goods are not usually illegal. Instead, they are sold outside normal distribution channels by companies which may have no relationship with the producer of the goods. Frequently this form of parallel import occurs when the price of an item is significantly higher in one country than another. This situation commonly occurs with electronic equipment such as cameras. Entrepreneurs buy the product where it is available cheaply, often at retail but sometimes at wholesale, and import it legally to the target market. They then sell it at a price high enough to provide a profit but under the normal market price. International efforts to promote free trade, including reduced tariffs and harmonized national standards, facilitate this form of arbitrage whenever manufacturers attempt to preserve highly disparate pricing. Because of the nature of grey markets, it is difficult or impossible to track the precise numbers of grey-market sales. Grey-market goods are often new, but some grey market goods are used goods. A market in used goods is sometimes nicknamed a Green Market.
Importing certain legally restricted items such as prescription drugs or firearms would be categorized as black market, as would smuggling the goods into the target country to avoid import duties. A related concept is bootlegging, the smuggling or transport of highly regulated goods, especially alcoholic beverages. The term "bootlegging" is also often applied to the production or distribution of counterfeit or otherwise infringing goods. Grey markets can sometimes develop for select video game consoles and titles whose demand temporarily outstrips supply and the local shops run out of stock, this happens especially during the holiday season. Other popular items, such as dolls can also be affected. In such situations the grey market price may be considerably higher than the manufacturer's suggested retail price. Online auction sites such as eBay have contributed to the emergence of the video game grey market
•A grey market is a market where a product is bought and sold outside of the manufacturers authorized trading channels.
•Grey market is an unofficial market in which goods are bought and sold at prices lower than the official price set by a regulatory agency
•A grey market or gray market is the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer. In contrast, a black market is the trade of goods and services that are illegal in themselves and/or distributed through illegal channels, such as the selling of stolen goods, certain drugs or unregistered handguns.
Description of Grey Market
Unlike black market goods, grey-market goods are not usually illegal. Instead, they are sold outside normal distribution channels by companies which may have no relationship with the producer of the goods. Frequently this form of parallel import occurs when the price of an item is significantly higher in one country than another. This situation commonly occurs with electronic equipment such as cameras. Entrepreneurs buy the product where it is available cheaply, often at retail but sometimes at wholesale, and import it legally to the target market. They then sell it at a price high enough to provide a profit but under the normal market price. International efforts to promote free trade, including reduced tariffs and harmonized national standards, facilitate this form of arbitrage whenever manufacturers attempt to preserve highly disparate pricing. Because of the nature of grey markets, it is difficult or impossible to track the precise numbers of grey-market sales. Grey-market goods are often new, but some grey market goods are used goods. A market in used goods is sometimes nicknamed a Green Market.
Importing certain legally restricted items such as prescription drugs or firearms would be categorized as black market, as would smuggling the goods into the target country to avoid import duties. A related concept is bootlegging, the smuggling or transport of highly regulated goods, especially alcoholic beverages. The term "bootlegging" is also often applied to the production or distribution of counterfeit or otherwise infringing goods. Grey markets can sometimes develop for select video game consoles and titles whose demand temporarily outstrips supply and the local shops run out of stock, this happens especially during the holiday season. Other popular items, such as dolls can also be affected. In such situations the grey market price may be considerably higher than the manufacturer's suggested retail price. Online auction sites such as eBay have contributed to the emergence of the video game grey market
Drop Shipping
What is Drop Shipping?
•Drop shipping is an arrangement that a retailer makes with a wholesale distributor. The retailer sells the product, and the wholesaler then ships it to the customer complete with the retailer's label on the package.
•Drop shipping is a product delivery method in which the seller (retailer) accepts payment for an order, but the customer receives the product(s) directly from the manufacturer. In a drop shipping arrangement, the retailer acts as a middleman between the manufacturer and the customer. His profit in the transaction is the difference between the wholesale and retail price of the items sold.
Advantages of Drop Shipping
•No inventory
•No shipping
•You buy wholesale and sell retail
•Distributor supplies product information and new products
Disadvantage of Drop Shipping
The main disadvantage to drop shipping is that there is a slightly higher chance that there will be returns. Since the retailer cannot see the product, it's possible that the wrong type will be shipped, and the quality of the product cannot be verified.
When starting a retail business, inventory can easily be one of your largest expenses. Not only that, but over time you have to keep your inventory current and stocked with the products your customers most want to buy. If your inventory becomes outdated, you might have to sell it to a discount company at a loss. Overall, no inventory means less risk to you as a retailer.
Depending on the size of your business, shipping and mailing can expend a lot of your resources. This includes processing orders, packaging, and making arrangements with a shipping company to pick packages up or taking them down to the post office yourself and mailing them. For small businesses, it requires having one or more employees dedicating part of their workday to shipping, taking time away from other tasks. For larger businesses, it means having a full-time mailroom with perhaps a dedicated mailroom supervisor. Either way, drop shipping offers an alternative that alleviates shipping and frees your employees for other duties.
The great thing about drop shipping is that you never have to buy an item wholesale until you've already sold it retail. Not only do you benefit from no inventory costs, you also profit from the difference between the wholesale and retail price. You have to get the best price you can wholesale in order to stay competitive in the retail market.
The key to finding a distributor with the best price is to get as close as possible to the manufacturer of a product. Contact the manufacturer and if they don't drop ship, they can recommend a distributor who does. (Please note that the distributor will require you to have a resale or tax number to buy the products wholesale.)
Once you have secured an arrangement with a distributor, you can begin using their product information on your Web site. Larger distributors have marketing packages and smaller ones will let you download pictures and information from their site. In addition, if the distributor begins carrying a new product line, you have the option of adding it to your online selection. This keeps you current without having to do your own research and development.
Things to consider when selecting a distributor for drop shipping
•Watch out for companies that aren't legitimate wholesalers. (Be suspicious if they don't ask for a tax ID number.)
•Be wary of monthly fees. (You should not have to pay to sell their product.)
•Online shopping is highly competitive. Optimally, products should be in demand, but not widely available online — what are called niche markets.
•Be sure the drop shipper uses a method of shipping, such as FedEx or UPS, which can be tracked. (This is helpful when the customer wants a status on their order.)
•Ask about the distributor's policy on defective products and returns. (This always comes up in retail businesses.)
How Drop Shipping Works
Steps Involved in Drop Shipping
•You open an Internet Store with a shopping cart and accept credit cards on your site. You can also sell on Internet Auction sites such as eBay.
•You find a distributor who will dispatch the products you want to sell.
•You open an account with the "drop ship" distributor(s) you choose.
•You receive descriptions and images of the products you wish to sell from the distributor and put them on your Internet Store or Auction.
•When a customer buys from your Store or Auction, they pay with their credit card. Your Store or Auction charges their credit card plus shipping.
•You email the order to the drop ship distributor with the customer's name and address.
•Then the drop shipper dispatches the product to your customer from the warehouse with YOUR business name on the package.
•Then the company charges you the wholesale price plus shipping. Remember you have already passed the shipping charge on to your customer, so the shipping costs you nothing.
•Drop shipping is an arrangement that a retailer makes with a wholesale distributor. The retailer sells the product, and the wholesaler then ships it to the customer complete with the retailer's label on the package.
•Drop shipping is a product delivery method in which the seller (retailer) accepts payment for an order, but the customer receives the product(s) directly from the manufacturer. In a drop shipping arrangement, the retailer acts as a middleman between the manufacturer and the customer. His profit in the transaction is the difference between the wholesale and retail price of the items sold.
Advantages of Drop Shipping
•No inventory
•No shipping
•You buy wholesale and sell retail
•Distributor supplies product information and new products
Disadvantage of Drop Shipping
The main disadvantage to drop shipping is that there is a slightly higher chance that there will be returns. Since the retailer cannot see the product, it's possible that the wrong type will be shipped, and the quality of the product cannot be verified.
When starting a retail business, inventory can easily be one of your largest expenses. Not only that, but over time you have to keep your inventory current and stocked with the products your customers most want to buy. If your inventory becomes outdated, you might have to sell it to a discount company at a loss. Overall, no inventory means less risk to you as a retailer.
Depending on the size of your business, shipping and mailing can expend a lot of your resources. This includes processing orders, packaging, and making arrangements with a shipping company to pick packages up or taking them down to the post office yourself and mailing them. For small businesses, it requires having one or more employees dedicating part of their workday to shipping, taking time away from other tasks. For larger businesses, it means having a full-time mailroom with perhaps a dedicated mailroom supervisor. Either way, drop shipping offers an alternative that alleviates shipping and frees your employees for other duties.
The great thing about drop shipping is that you never have to buy an item wholesale until you've already sold it retail. Not only do you benefit from no inventory costs, you also profit from the difference between the wholesale and retail price. You have to get the best price you can wholesale in order to stay competitive in the retail market.
The key to finding a distributor with the best price is to get as close as possible to the manufacturer of a product. Contact the manufacturer and if they don't drop ship, they can recommend a distributor who does. (Please note that the distributor will require you to have a resale or tax number to buy the products wholesale.)
Once you have secured an arrangement with a distributor, you can begin using their product information on your Web site. Larger distributors have marketing packages and smaller ones will let you download pictures and information from their site. In addition, if the distributor begins carrying a new product line, you have the option of adding it to your online selection. This keeps you current without having to do your own research and development.
Things to consider when selecting a distributor for drop shipping
•Watch out for companies that aren't legitimate wholesalers. (Be suspicious if they don't ask for a tax ID number.)
•Be wary of monthly fees. (You should not have to pay to sell their product.)
•Online shopping is highly competitive. Optimally, products should be in demand, but not widely available online — what are called niche markets.
•Be sure the drop shipper uses a method of shipping, such as FedEx or UPS, which can be tracked. (This is helpful when the customer wants a status on their order.)
•Ask about the distributor's policy on defective products and returns. (This always comes up in retail businesses.)
How Drop Shipping Works
Steps Involved in Drop Shipping
•You open an Internet Store with a shopping cart and accept credit cards on your site. You can also sell on Internet Auction sites such as eBay.
•You find a distributor who will dispatch the products you want to sell.
•You open an account with the "drop ship" distributor(s) you choose.
•You receive descriptions and images of the products you wish to sell from the distributor and put them on your Internet Store or Auction.
•When a customer buys from your Store or Auction, they pay with their credit card. Your Store or Auction charges their credit card plus shipping.
•You email the order to the drop ship distributor with the customer's name and address.
•Then the drop shipper dispatches the product to your customer from the warehouse with YOUR business name on the package.
•Then the company charges you the wholesale price plus shipping. Remember you have already passed the shipping charge on to your customer, so the shipping costs you nothing.
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