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05/03/2012

Assignment of Direct Marketing


Company Background

            SurePass (fictional name) is the leading provider of student assistance services in Hong Kong. The company caters to secondary school students and provide a range of training programmes to help students pass the Hong Kong government university entrance examination. The company is currently the number examination passing services provider in Hong Kong. The company’s success in its field has encouraged a number of individuals and organizations to venture into examination passing services. In order to maintain its leadership position and to expand its business market, the company decided to launch its services in Macau. This new milestone, requires careful planning and employment of resources.

Advantages and Disadvantages of Direct Marketing

            Direct marketing can be simply defined as a direct communication between seller and buyer (Mullin, 2002). Direct marketing is defined by Kitchen and De Pelsmacker (2004) as an interactive system of personal and intermediary-free dialogue which uses one or more communications media to effect a measurable behavioral response at any location, forming a basis for creating and further developing an ongoing direct relationship between an organization and each of its customers individually (p. 65). The aim of direct marketing is creating one-to-one personalized and therefore persuasive interaction with customers. Direct marketing has a number of strengths which makes it a very attractive marketing approach.

            For one, direct marketing is helpful if the organization wants to build a relationship with the customers instead of between the distributor and the customers. Because it is individualized, it can be persuasive. It also allows personalized and interactive communication, and it easily leads to behavioral response. The customer receives shopping convenience, time utility and satisfaction, and an improved quality and speed of service. When built upon a powerful database, it allows flexible and precise targeting of customer segments and it can therefore avoid waste. Its effect can be easily and precisely measured, and it has a high degree of accountability. A marketer can know the campaign results within hours or days (Kitchen & De Pelsmacker 2004). Direct marketing is valued by marketers because of its measurability. It is considered as the only form of advertising that is measurable. The marketer knows exactly how many response they get, and where those responses are coming from. Additionally, it aids in expanding the customer base of a company and is a perfect way to establish and maintain long-term customer relationships (Geller, 2002).

            Direct marketing also has its limitations. One disadvantage of direct marketing is that it has a tendency to result in higher cost especially if the directed marketing campaign is not well targeted. It increasingly suffers from clutter, People are bombarded with direct mail, and when ill-targeted these messages may easily be perceived as junk mail. Telemarketing campaigns are not liked very much, because they are perceived as silly and incredible. Direct marketing also has the reputation of being pushy and intrusive due to the sometimes extreme sales orientation of the campaigns.

Proposed Direct Marketing Approaches

1. Direct Mail

            Direct mail is material distributed through the postal system to the customer at his or her home or business address to promote a product. It can be a letter, a sample, or a catalogue (Kitchen & De Pelsmacker, 2004). The company can send catalogues to schools addressed to students or the company can send mails to the students’ home. The company can also send catalogues to different school clubs and their members. In this modern time, the company can use email as a form of direct marketing. Email is considered as the natural evolution from direct mail. E-mail can be the highest return on investment (ROI) form of direct marketing currently available (Stone & Jacobs, 2007).

2. Direct Response Advertising

            Direct response advertising is an additional element to the advertising campaign. The effectiveness of direct response lies in its ability to blend with the overall marketing strategy of the company (Mullin, 2002). Direct response advertising is a message in traditional mass medium that asks the reader, viewer, or listener to respond directly to the sender to ask for further information or to buy a product. The receivers of the message are invited to send back a coupon (print media), to call a (toll-free) telephone number, or to visit a website. The company can use this approach to attract potential customer. The company can include coupons on its advertisements in magazines targeted toward students.

3. Telemarketing

            In telemarketing a direct and verbal interaction with the individuals of the target group is effectuated. The company can use either inbound or outbound telemarketing. In outbound telemarketing, the marketer is the one who calls the potential customer to ultimately sell the product or service. This can also be an effective way of updating database on customer information and to perform marketing research. Inbound calls can also be used by the company (Kitchen & De Pelsmacker, 2004). Since inbound calls are made by students and parents inquiring about the company’s services, the company’s representatives to promote the company.

Advantages and Disadvantages of Each Approach

1. Direct Mail

            Direct mail, when based on a high-quality database, allows careful targeting of specific customer segments. Mails can also be personalized, which give them a directness and intimacy that most other communications media cannot achieve. It is also a flexible medium, because all kinds of things can be sent, from letters to samples and catalogues. Through direct mail, the company can be able to be very creative in order to attract more customers. In general, direct mail is also capable of holding the attention – although for a brief moment – much better than mass media advertising. It can be used to stimulate inquiries, generate leads, direct people to a website, or sell products. The effect of a direct mail campaign can easily be measured (Kitchen & De Pelsmacker, 2004). One disadvantage is that direct mail runs the risk of being considered as a junk mail. People are generally wary of unsolicited mails that go into their mailboxes so marketers may have a hard time making direct mails attractive (Kurtz, 2008).

2. Direct Response Advertising

            Direct response advertising can be useful because it has the potential to allow the company to gather more information about the customers. Direct response advertising will also allow the company to target its marketing efforts to interested customers. On the other hand, customers have very low regard of direct response advertising.

3. Telemarketing

            One advantage of telemarketing is with direct interaction and a verbal dialogue with the customer, problems or inquiries can immediately be addressed and immediate feedback can be given. The interaction is flexible and can be tailor-made. It is a cheap way of maintaining frequent personal contacts with customers. It can also cost-efficiently replace part of the personal selling function, for instance to make appointments, generate repeat purchase, or follow up on leads.           Telemarketing also has a number of limitations. One possible limitation of telemarketing, is the company has limited resources to set up a call center to efficiently handle inbound calls. Outbound telemarketing is often not very well received by consumers. They often perceive it as very intrusive, especially if the purpose of the call is information gathering or hard selling.

Recommendations

1. (Attention, Interest, Desire, Action) AIDA Approach

            The AIDA approach involves gaining the customer’s attention, creating interest, nurturing a desire for the service or product, and stimulating action to request or purchase the work or product. The AIDA Model proposes that consumers respond to marketing messages in a cognitive (thinking), affective (feeling), and conative (doing) sequence. The AIDA approach can be used by the company in direct marketing. For example in direct marketing, a company representative should use a friendly greeting and approach, or by using loud volume, unusual color contrasts, bold headlines, movement, bright colors, and the like in advertisement. Next, a good sales presentation, demonstration, or advertisement creates interest in the product and then, by illustrating how the product’s features will satisfy the consumer’s needs, arouses desire. Finally, a special offer or a strong closing sales pitch may be used to obtain purchase action (Lamb et al, 2008).

2. Customer Relationship Management (CRM)

            CRM is defined as the process of managing detailed information about individual consumers and all customer ‘touch points’ with the objective of maximizing customer satisfaction, loyalty and profitability. It is a combination of customer service and customer retention management. Customer Relationship Management (CRM) can be defined as the development and maintenance of mutually beneficial long-term relationships with strategically significant customers (Buttle 2000). CRM according to Plakoyiannaki and Tzokas (2001) is an IT enhanced value process, which identifies, develops, integrates and focuses the various competencies of the firm to the ‘voice’ of the customer in order to deliver long-term superior customer value, at a profit to well identified existing and potential customers.

Customer relationship management focuses on strengthening the bond between customers and the firm by maximizing the value of the relationship for the benefit of both the customer and the firm.

References

Geller, L.K. (2002). Response: The complete guide to profitable direct marketing. New York: Oxford University Press.

Kurtz, D.L. (2008). Contemporary marketing. Cengage Learning.

Lamb, C.W., Hair, J.F. Jr., & McDaniel, C. (2008). Essentials of marketing. Cengage Learning.

Mullin, R. (2002). Direct marketing: A step-by-step guide to effective planning and targeting. Kogan Page Publishers.

Stone, B. & Jacobs, R. (2007). Successful direct marketing methods: Interactive, database, and customer-based marketing for digital age. McGraw-Hill Professional.

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