3.case study e_bay_direct marketing & dircet selling system

ACCMAN

Cases on Direct Marketing & Direct Selling System

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Contents

• Definition of Direct Marketing

• Advantages & Problems in Direct Marketing

• Prospects of Direct Marketing

• Definition of Direct Selling

• Advantages & Problems in Direct Selling

• Prospects of Direct Selling

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Company: eBay

eBay Inc. is an American Internet company that manages eBay.com, an online auction and

shopping website in which people and businesses buy and sell a broad variety of

goods and services worldwide.

• Founded in 1995, eBay is now a multi-billion dollar business with operations localized in over thirty countries.

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eBay Sending Out Catalogs-What Gives Here?

That’s right, during the first Christmas season of the new millennium, eBay sent out some 23 million full-color glossy catalogs in the form of inserts in more than fifty newspapers all over

the United States.

• The eight-page catalog displayed products ranging from Harry Potter trading cards to Palm Pilot PDAs.

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Why dot-com like eBay issue “old-fashioned” printed catalogs to be distributed through

even more old-fashioned newspapers?

• Well, even in an era of new-wave technology, is still paying attention to another old-fashioned idea- the need to understand and respond to consumer behavior.

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Why dot-com like eBay issue “old-fashioned” printed catalogs?

• eBay knows that around the holiday season, consumers traditionally like to reach for catalogs to get into the spirit of Christmas shopping. Catalogs provide consumers with wish lists and gift ideas and help foster a buying mood as shoppers glance through the pages.

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With 6.5 million items listed at any given time on eBay’s web-site, did you think the company was

looking to directly sell only few items listed in the eight-page catalog?

• But eBay was hoping to persuade consumers who had not given any thought to using eBay for holiday shopping to consider it after looking at the catalog.

• After all, while millions of people have used eBay, many more millions have not. eBay knows that plenty of those nonusers read newspapers and thumb through catalogs.

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So, by putting millions of catalogs in millions of newspapers, eBay hopes to get a few

million more eBay shoppers and the millions of dollars in fees and commissions that go

with those new eBay users.

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Do you think the case (Sending out Millions of Catalogs) is related to Direct Marketing

concept?

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Now Another Case…

How many of you are looking to start your own business after completing Master

degree or in near future?

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Case of an Entrepreneur

An interesting example of direct marketing is the case of a person who started his business in a locality of Delhi with 1500 apartments. He got leaflets printed announcing free home delivery of any product required with his residential

address and phone number.• That cost him Rs 2,000. He also paid Rs 150 each to the newspaper

vendors for inserting this leaflet in newspapers.

• Once a week, he went to Sadar Bazar to stock goods at home. He not only earned money to quit his job but also substantial goodwill in the locality.

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Definition of Direct Marketing

Direct marketing is an interactive system of marketing that uses one or more advertising media to effect a

measurable response and/or transaction at any location.

• Direct mail in the form of letters, flyers, brochures and catalogs are heavily used.

• Others are newspapers, magazines, television, radio, telephone, internet used in recent years.

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Characteristics of Direct Marketing

Direct marketing is an interactive system of..• Unlike direct selling, direct marketing can involve both

consumer and industrial market.

• Sellers can be manufacturers, wholesalers, retailers or any other type of agency, institution or individual.

• Similarly, buyers can range from individual consumers to giant corporations, institutions or government agencies.

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Advantages of Direct Marketing1. Focused approach

2. Cost effective- very effective for the niche products

3. Easy international reach

4. Consumers’ desire for convenience in shopping

5. Immediate impact and flexible- TV ads take a great deal of time to develop from first idea to final execution

6. Tailored message- for a particular group of consumers

7. Measurable- possible to link a particular sale as being a response of particular Direct Marketing activity

8. Opportunity to build a database

9. DM already has been, and further enhanced by technology

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Disadvantages of Direct Marketing

1. Fundamental limitation- potential customers cannot see and examine the actual product before making a purchase. (perceived risks higher on the part of consumers)

2. Response rates are very low- generally industry response rate is 1 to 2 percent only

3. Costs- initial customer acquisition costs are high- high cost per thousand reached; and database development can be expensive.

4. DM is marked by intense competition- thousands of firms

5. Image problem- unethical and dishonest practices

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Companies: Direct MarketingDirect marketing is

- interactive system or approach to marketing

- uses one or more advertising media

- expected to results in a measurable response

Products sold examples

Suitable for both B2C & B2B sales, mail order, TV shopping

Firms involved examples

Dell computers, HP printer cartridges

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Definition: Direct Selling

The sale of a consumer product or service, in a person-to-person

manner, away from a fixed retail location, where the company offers

opportunities to an independent contractor sales force.

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Multilevel Marketing/Network Marketing

A compensation system within direct selling, where a distributor/salesperson can earn

money not only on their own personal sales, and not only on the sales of a person

personally recruited by them, but also on sales of persons recruited by their personal

recruits.

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Direct Selling

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Problems

- Prospects not aware of direct selling as a channel

- Negative impression about direct selling

- Consumer availability at home

- Perceived risk of buying from direct selling agents

- Availability of direct sales people

Prospects

- Large untapped market (potential consumers)

- Changing lifestyle, less time for retail visit

- Retailers shifting to self-service formats

3.case study e_bay_direct marketing & dircet selling system

Leadership & Management

ebay ebay

direct marketing concept

ebay shoppers

millions of catalogs

accman cases

new ebay users

color glossy catalogs

millions of newspapers