The Growth of Direct Marketing
The Growth of Direct Marketing
Sales through traditional direct marketing channels (catalogues, direct mail and telemarketing) have been growing rapidly. A recent survey on worldwide Sales through traditional direct marketing channels (catalogues, direct mail and telemarketing) have been growing rapidly. A recent survey on worldwide
spending on conventional direct marketing channels (e.g. direct mail) will continue to outstrip that for massmarketing channels in the next five years."
While direct marketing through traditional channels is growing rapidly, online marketing is growing explosively. The creation of the 'information super Internet (the Net)
highway' or Internet promises to revolutionize commerce. According to a reeent
A vast global computer survey by the US company Network Wizards, there were some 9,472,000 network that enables
computer eonncctions to the Internet worldwide in 1996, up from 4,852,000 in computers, with the
January 1995. The number of Internet connections is doubling each year. right software
and a modem Internet penetration statistics produced by the Reseaux IP liuropeens (RIPE)
(a telecommunications Network Coordination Centre's DNS Hostcotmt (http://WWwjlpe.net) show that
device that sends data there are currently over 3 million computers connected to the Internet in Europe. across telephone lines),
Although there is no accurate count of the actual number of users of the Internet, to be linked together so
whieh is estimated to be around 305 million, or higher, user penetration is rising that cheir users can 3 and the trend is forecast to continue over the next few years. Previously domi
obtain or share nated by technically oriented, young, male users, the Internet is now attracting information and interact
more females and more users in the 2535 age group. While still some way from with other users.
becoming the dominant promotion medium for businesses and other organiz ations, its use is growing and few companies can ignore its potential as a cost effective global marketing tool. For example, the Internet search company Yahoo! had limited resources whieh precluded the use of mass advertising to promote its brand name. Instead it made use of the global reach of the Internet. Yahoo! grew out of a list of favourite Web sites maintained by two Stanford University students. Although theirs was one of hundreds of similar Web navigation services, at the time, it attracted many newcomers to the Internet with its contemporary style and catchy name, while also providing a service that users regarded as a friendly 'home base" among the confusion of the Web. Yahoo! relied on strategically placed 'hyperlinks' on other Web sites, such as the home page of Netscape Communications, the world's leading supplier of Web browser software, to attract users at minimal cost. And then, it relied on users to spread the word to attract new users to the service. Only recently has Yahoo! begun to advertise on TV and radio to encourage 'near surfers' who are not yet online, but are interested in "taking the plunge', to use its services. An estimated 5 million computer users go
to Yahoo!'s pages every day. At a market capitalization of $2.3 billion, Yahoo! is
currently the most highly valued Internet company. 4
Over 100,00 companies around the world have launched Web sites during the past year and the number is rising. In businesstobusiness marketing alone, annual revenues on the Internet amount to $600 million, and that number could go as high as «S*66 billion by the year 2000. ; We will examine online marketing in greater detail later in this chapter.
What are the factors that are driving the growth in direct marketing? In the consumer market, the extraordinary growth of direct marketing is a response to the new marketing realities discussed in previous chapters. Market 'demassifi eation' has resulted in an everincreasing number of market niches with distinct preferences. Direct marketing allows sellers to focus efficiently on these micro markets with oilers that better match specific consumer needs.
Fragmentation of the television audience and the increasing cost of reaching consumers en masse is another driver. The soaring value of commer cial slots in a diminishing number of TV programmes that pull in the big audi ences means that many advertisers, under pressure to show a return on advertising investment, are turning to direct marketing methods.
Other trends have also fuelled the rapid growth of direct marketing in the consumer market. Higher costs of driving, traffic congestion, parking headaches.
Customer Databases and Direct Mtxrketmg • 953
Table 22.1
Mass marketing versus OnetoOne Marketing
MASS MARKETIKC,
ONETOONE MARKETING
Average customer
Individual customer
Customer anonymity
Customer profile
Standard product
Customized market offering
Mass production
Customized production
Mass distribution
Individualized distribution
Mass advertising
Individualized message
Mass promotion
Individualized incentives
Oneway message
Twoway messages
Economies of scale
Economies of scope
Share of market
Share of customer
All customers
Profitable customers
Customer attraction
Customer retention
lack of time, a shortage of retail sales help and long queues at checkout counters all encourage athome shopping. Consumers are responding favourably to direet marketers' freephone numbers, their willingness to accept telephone orders 24
hours a day. seven days a week, and their growing commitment to customer service. The growth of 24hour and 48hour delivery via express carriers such as Federal Express. UP L S, DHL and others has made direct shopping fast and easy, Finally, the growth of affordable computer power and customer databases has enabled direct marketers to single out the best prospects for any product they wish to sell.
Direct marketing has also grown rapidly in businesstobusiness marketing, partly in response to the everincreasing costs of reaching business markets through the sales force. When personal sales calls cost several hundred pounds
per contact, they should be made only when necessary and to highpotential customers and prospects. Lower costpercontact media such as telemarketing, direet mail and the newer electronic media often prove more costeffective in reaching and selling to more prospects and customers/'
Parts
» Book Principles Of Marketin Pleased
» I'hrce considerations underlying the
» The Information Technology Boom
» • False Wants and Too Much Materialism
» There is good reason to search a 2.4
» Levi's Strategic Marketing and Planning
» Analysing the Current Easiness Portfolio
» Conflict Between Departments
» Marketing Strategies for Competitive Advantage
» Principal actors in the company's
» • Persistence of Cultural Values
» McDonald's; Breaking into the South African Market
» Analysis of International Market Opportunity Deciding Whether or Not to Go Abroad
» Understanding the Global Environment
» Procter & Gamble: Going Global in Cosmetics
» Sheba: The Pet's St Valentines Day Pedro Quclhas Brito, Universidade do Porto, Portugal
» Individual Differences in Innovativcncss
» Influence of Product Characteristics on Rate of Adoption
» Selling Business Jets: The Ultimate Executive Toy
» • Systems Buying and Selling
» • Strong Influences on Government Buyers
» TABI.EI GOVERNMENT CODES OF PRACTICE IN VARIOUS COUNTRIES
» Qantas: Taking Off in Tomorrow's Market
» • Defining the Problem and Research Objectives
» CLOSEDEND QUESTIONS NAME DESCRIPTION
» Estimating Total Market Demand
» Estimating Actual Sales and Market Shares
» TimeSeries Analysis technology.
» Segmenting International Markets
» • Selecting Market, Segments
» 2 VOLUME BRAND SHARES (%) BRAND SHARE CoffeeMate total: 55.5
» 7 CONSUMPTION BY HOUSEHOLD SIZE (PER PERSON/WEEK)
» Preview Case Gastrol: Liquid Engineering
» Determine the Competitors'Positions One way of defining competitors is to look at
» Communicating and Delivering the Chosen Position
» The Need for Customer Retention
» The Ultimate Test: Customer Profitability
» 1 POTENTIAL PRODUCT FIELDS FOR AN EXPANSION OP THE UNCLE BEN'S BRAND
» 2 VARIETIES OF UNCLE BEN'S FEINSCHMECKER SAUCE
» Federal Express: Losing a Packet in Europe
» Close or Distant Competitors
» • Expanding the Total Market
» • The Customer Service Department
» What Governs NewProduct Success?
» Lufthansa: Listening lo Customers
» Managing Productivity CU _ C7 ^ •
» Mattel: Getting it Right is No Child's Play
» Internal Factors Affecting Pricing Decisions
» • BreakEven Analysis and Target Profit Pricing
» 1 CAR OWNERSHIP ACROSS THE EUROPEAN UNION
» Mobile Phones: Even More Mobile Customers
» Stena Sealink versus Le Shuttle, Eurostar and the Rest
» Preview Case British Home Stores
» • Selecting the Message Source
» Setting the Total Promotion Budget
» Factors in Setting the Promotion Mix
» Integrated Marketing Communications
» Setting the Advertising Budget
» • Selecting Advertising Media
» Standardization or Differentiation
» Media Planning, Buying and Costs
» IBM Restructures the Sales Force
» • Other Sales Force Strategy and Structure Issues
» 5 per cent sales elite apart from the rest is 'an astounding 60 per cent [are] just there for the
» Britcraft Jetprop: Whose Sale is it Anyhow? 1
» 1 COMMERCIAL SUCCESS OF THE JETPROP AIRCRAFT, 1992 NUMBER OF CONTINENT
» 1 PANEUROPEAN CONSUMER GROUPS
» Analyzing Customer Service Needs
» Defining the Channel Objectives and Constraints
» Identifying Major Alternatives
» Designing International Distribution Channels
» Evaluating and Controlling Channel Members
» • Building Channel Partnerships
» The Growth of Direct Marketing
» Customer Databases arid Direct Marketing
» DirectResponse Television Marketing
» Online Marketing and Electronic Commerce
» Germany, the UK and other countries in Europe 1997 to SI.64 billion or 7.5 per cent of global
» • Creating an Electronic Storefront
» • Participating in Forums, Newsgroups and IVcb Communities
» • The Promise and Challenges of Online Marketing
» Roberto Alvarez del Blanco and Jeff Rapaport*
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