The Principles & Practice of Direct Marketing

Chapter 1Defining Direct Marketing & the Importance of

Direct Marketing

Direct marketing is a system of marketing by which organizations directly communicate with the target customer/s to generate a response or transaction. This response may take the form of an inquiry, a purchase or even a vote.

“Direct Marketing is the total of activities by which the seller in effecting the exchange of goods and/or services with the buyer, directs efforts to target audience using one or more media (direct selling, direct mail, telemarketing, direct-action advertising, catalogue selling, cable TV selling, mobile marketing etc) for the purpose of soliciting a response by phone, mail or personal visit from a prospect orcustomer.” - Peter Bennet

Direct Marketing involves all activities of marketing: Marketing Research, Segmentation, Target Marketing, and Evaluation.

Direct Marketing is an interactive system of marketing which uses one or more media to effect the ‘measurable’ response or transaction at any level.

D.M. is used for Niche products, Service Products or Programs.

Traditionally Direct Marketing was performed using Catalogues, Direct mail, Telemarketing.

Strategies of D.M. - uses a number of media and each medium performs specific functions. Generally, they follow-

One-Step Method the medium is used directly to obtain an order. Goal is to generate immediate sale.

Two-Step Method- can involve the use of more than one medium. The first effort- to screen or qualify potential buyers. The second effort generates the response. Telemarketing + Direct Mail.

Basic Reasons for the Growth of Direct Marketing

Changing Market Place:

Growth of delivery systems and media fragmentation.

Affordable computing power & growth of databases (databases used for future purpose of marketing).

Changing Role of Direct Marketing & Business focus:

Building & maintaining customer relationship

To maximize sales

To maximize customer loyalty

Changing Cost Structures:

It is getting to be more expensive to use mass-media.

Advertising is done thro’ line extensions- since advt. is above- the- line expenditure.

Increasing clutter in media.

Technological development: (Advances & Innovations)

Changes in the market place- B2B selling- it has increased or has seen tremendous growth.

The change place of market- e.g. home, office etc.

Alternative distribution channels.

Changing lifestyles and demographics.

Evolving economy and international competition.

“ Direct marketing is an interactive system of marketing which uses one or more advertising media to effect a measurable response and/or transaction at any location.”

There are three key elements (Direct Marketing) of this definition. They are as follows:

First, direct marketing is ‘interactive’ in that marketer and prospective customer engage in two-way communication. The response or non-response of the customer completes the communication loop in the direct marketing process. E.g. filling in the response coupon by the customer and mailing it. That is, direct marketing activities give the target market of the communication an opportunity to respond.

Second, all direct marketing activities are significantly more ‘measurable’ than traditional general advertising and sales promotion. A response or the lack of it can be associated with each direct mail piece, each catalog mailing, or each direct

response television advertisement. Direct marketers use direct marketing databases of stored purchase behavior and other information about individuals & households to analyze customer characteristics and plan new campaigns. These databases are the foundation of effective direct marketing.

Third, direct marketing activities can take place from any ‘location.’ Marketer can interact with the customer over phone, through mail, Internet, by fax.

WHY DIRECT MARKETING?

The environment has become more complex.

Bargaining power of the consumer has increased.

Market has become more competitive.

Cost of marketing a product has increased. The retail shelf cost at outlets in major cities is costly.

Advertising budgets are high.

Less customer loyalty.

DM helps companies focus on their marketing efforts.

Consumer lifestyle has changed. Today, customers look out for convenience in shopping. Tele-shopping, home shopping, catalog marketing and online marketing cater to core customer value.

Globalization has facilitated the growth of direct marketing.

Niche markets with distinct preferences- DM

Technology has changed and enhanced the DM activity.

Competencies of Direct Marketing

Direct marketers seeks to persuade people to buy products or services, like other forms of promotion. Virtually, all of direct marketing’s special competencies derive from the fact that the communications are directed at specific individuals and not at mass markets via mass media. This includes the combination of advertising and selling into a single function, the prominence of customer service, the ability to precisely target individuals, and the ability to create personalized messages that call for immediate action. Finally, the results of direct marketing campaigns can be monitored and measured.

Combinations of Advertising & Selling: Direct marketers use paid messages in mass media to elicit a response from their prospective customer. In the process, the communication performs both an advertising and selling function without an intermediary. This makes it cost effective because it reduces intermediary mark ups to increase profits.

Customer Service: Customer service plays an important role in direct marketing. For most firms, customer loyalty is an important issue because companies make money from repetitive pattern of purchases rather than from just one sale. Customer service is important and encourages regular interactions between the direct marketer and the customer. A popular idea- Relationship Marketing.

Precision targeting: Direct marketing communications are frequently aimed at individuals. This is particularly true of direct-mail and telemarketing campaigns based on the use of segmented lists that come from information contained in databases. Targeted marketing reduces the waste that occurs in other forms of communications.

Call for Immediate action: Direct marketing offers calls for specific and immediate action. The prospect is encouraged to place an order or request more information by calling a number or sending in a card.

Personalization: In direct marketing communications, individual consumers are

addressed by name. while business prospects should be addressed by name & title. Information from a database is used to produce a specific appeal based on consumer’s personal characteristics and/or past purchase behavior.

Measurement: Direct marketing activities have an advantage since it facilitates performance tracking. Campaigns can be monitored to determine its success and precisely identifying what worked and what did not. This helps in the efficient allocation of marketing resources. Tracking performance allows direct marketers to analyze relationships between customer characteristics & buyer behavior in their database.

Invisible strategies: Direct marketers have the advantage to conceal their strategies from their competitors or make it less visible since they are on a one-to-one communication with their customers.

Mass Marketing Vs One-to- One Marketing

MASS MARKETING ONE TO ONE MARKETING

Average customer Individual customer

Customer anonymity Customer profile

Standard product Customized market offerings

Mass production Customized production

Mass distribution Individualized distribution

Mass advertising Individualized messages

Mass promotion Individualized incentives

One way communication Two way communication

Economies of scale Economies of scope

Share of market Share of customers

All customers Profitable customers

Customer attraction Customer retention

Benefits of Direct marketing

Home shopping- hassle free & fun, convenient.

Saves time.

Introduces a customer to a large variety of products at a time.

Comparative shopping is possible by browsing through mail order catalogues & online shopping.

Can order goods for ourselves & others also.

Sellers also benefit, they can personalize, customize messages.

Direct marketers can build a continuous relationship with each customer. E.g. Parents of newborn babies may receive periodic mailings on clothes, toys etc as the child grows. Nestle baby division builds a database continuously of new

mothers and sends personalized packages of gifts and advice at the key stages in the baby’s life.

Direct marketing strategies can be timed to reach prospects at the right time and moments. Thus, DM receives a higher readership because it is sent to more interested prospects.

Direct marketing strategies & offer benefit the marketer

since it is less visible to the competitors.

Direct marketing helps in building effective long-term relationships with the customers and this helps in getting customers to stay loyal.

The measurable response to direct marketing campaigns help to decide the more profitable ones.

Decision Variables in Direct Marketing

For Direct Marketing, the following variables are associated with making program decisions:

1. Offer 2. Creative 3. Media 4. Timing/sequencing

5. Customer service

Offer: The ‘Offer’ is the complete proposition made to a prospective customer by the firm selling the good or service. It includes the product or service, the positioning of the product or service in terms of needs or benefits, the price of the offering, any risk-reduction mechanisms such as money-back guarantee, or price refund or discounts available to the buyer.

Creative: The creative component includes the copy platform, graphic design elements, involvement techniques, and production considerations such as personalization.

Media: The media used by direct marketers include all those used by general marketers as well as direct

mail, telephone, and online services. Direct- response print & TV advertising are particularly effective in generating responses to complex offers that contain items that can be displayed visually.

Timing/Sequencing: Timing & Sequencing of direct marketing communications determine whether the product or service is offered once or as a part of a campaign, that is, as one-shot message or as multiple messages. Also at issue is whether a campaign should be on intermittently (pulsing) or continuously, as well as how often should the communication be repeated.

Customer Service: Customer service is an important aspect of DM. It leads to strong customer franchise and loyalty. Satisfaction with service is a prime consideration in customers’ repurchase decisions. In fact, many direct marketers consider expenditures on customer service and loyalty as an investment. The types of customer service that build businesses include speedy and accurate order fulfillment; prompt and satisfactory handling of customer inquiries and complaints; and a guaranteed return

policy (such as- ‘if damaged/defective, email us at or write to us at-----’ or ‘to provide you a worry free shopping experience, we offer you a No Questions Asked Return Policy, within 7 days…..’). Other important elements of customer service are toll-free telephone numbers, money-back guarantees, and the acceptance of credit cards.

Limitations of Direct Marketing

Acquisition of data of individual customers may be difficult – Direct marketing is effective only when all information about the individual customer is available. It may be difficult to acquire this data, as people would be reluctant to part with personal information.

The customers could be exposed to information overload – In today’s rich business and personal environment everyone is bombarded with all types of data. Daily people receive letters, voice mails, catalogues etc. Welcome and unwelcome information accosts

the senses through the radio, television, telephone, books etc. Direct marketers are perceived to be contributing to this overload.

Requires highly skilled staff to analyze each customer profile – In Direct marketing communications, individual customers should be addressed by name & title. Also information from database is used to produce specific appeal based on consumers personal characters &/or past purchase behavior. It is therefore important that the profile of each individual customer is accurately maintained. This would be possible only if the staff employed is highly competent to carry out this accurately.

Customer Service rather than customer loyalty is more important in direct marketing

Direct Marketing Advantages

Selective Reach- DM reaches a large number of people, reduces waste coverage, and targets consumers with the highest potential.

Segmentation Capabilities- Direct marketers maintain lists of recent product purchasers, car buyers, property buyers, bank-card holders, credit-card holders, cellular service users and so on. Segmentation is done through these lists on the basis of geographic area, occupation, demographics, psychographics. Marketers develop effective segmentation strategies.

Frequency- Direct marketers build frequency levels through the medium /media used. Direct-response TV advertising is quite inexpensive. The frequency through direct mail is not easily accomplished.

Flexibility- Direct marketing uses a variety of creative forms. A direct mail provides detailed information; direct-response TV advertising

combines sound, sight and motion and allows product demonstration and so on.

Timing- DM, unlike other media can be much more timely. For e.g. a direct mail can be put together very quickly and distributed to the target population.

Personalization- Direct marketers can personalize the messages & offers most effectively.

Costs- the CPM for direct mail is high but its ability to specifically target the audience eliminates any waste coverage and hence reduces the actual CPM. Cost per consumer purchase contributes to cost-effectiveness of direct-response advertising. The cost of media is low, and each sale generated is inexpensive.

Measures the Effectiveness- Direct marketing program measures the effectiveness of the activity effectively. The feedback generated is immediate and accurate. This helps in the measurement of the DM activity.

Direct Marketing Disadvantages

Image Factors- Direct marketing suffers from poor image factors. Direct mail is often treated as junk mail. Direct-response ads on TV are often low-budget ads for low-priced products. This contributes to the image that something less than the best products are marketed although home shopping channels do promote some expensive products. Telemarketing and spam are irritating to many consumers thus lowering the image of the direct marketing industry.

Accuracy- One of the advantages of DM is targeting specific, potential customers. But, the effectiveness depends on the accuracy of the lists used which is very often inaccurate. Lists must be continually updated. Selectivity decreases if lists are not kept current.

Computerization has improved the currency of lists, yet the ability to generate lists remains a problem.

Content Support- Direct-response advertising requires the creation of mood but it is limited to the surrounding program and/or editorial content.

Direct mail, online services also unlikely to create a desirable mood.

Rising Costs-The Rising costs of direct marketing program serves as a disadvantage to the marketer.

For successful implementation of direct marketing program, a company needs to take a number of decisions. It is important to determine:

What the program’s objective will be

Which markets to target through the use of a list or a marketing database

What direct marketing strategies will be employed

How must the effectiveness of the program be evaluated

To determine the effectiveness of database, the database must be frequently updated.

RFM Scoring method must be employed to databases.

RFM- Recency, Frequency, Monetary transactions between the company and the customer.

It is important to enter the data each time a transaction is made. The company can keep a track of :

How recently purchases have been made

How often are they made

What amounts of money are spent

Tracking which products/services are used increases the ability to track the customer population & develop effective marketing strategies.

Objectives of Direct Marketing

Sale of products/Services

Lead Generation- People who respond to DM or are interested.

Lead Qualification- A prospect

Establishing & Maintaining Customer Relations.

SUSPECTS PROSPECTS CUSTOMERS

CLIENTS ADVOCATESDirect Marketing- Direct contact with customers through emails, telephone, direct mail or direct response using mass media such as TV, Internet.

Direct Mail- Fax mail. Email, Voice mail, Solo mails, Product catalogue/ brochures.

Direct-response TV & Radio- direct response; Infomercials, Space advertising-print, Specialty advertising in print; Binding cards ( Response cards- magazines), Specialty advertising in various media- coupons, samples etc.

Principles of Direct Marketing

There are eight key principles of direct marketing& they are as follows:

Planning your marketing activity: All direct marketing should form part of a controlled marketing strategy, which has been produced as a result of market and competitor analysis and in relation to achievable objectives.

Targeting your customer: Customer information should be stored and capable of manipulation and retrieval from your customer database, to contact your existing customers. Analysis of this also helps you to identify characteristics of potential future customers.

Measuring your marketing activity: The results of direct marketing should be measured to tell you what works and what doesn't.

Tracking: This involves monitoring customers' responses over time, ideally for as long as your relationship with them lasts. This enables you to measure their value and understand how much of it is a result of how you marketed to them.

Customer behavior: Tracking the spending patterns and general behavior of your customer can help you establish which products are popular and which aren't. This can help you determine future products and strategy.

Future strategies: One aim of marketing is to maximize the value of your customers. So the

previous steps will ensure you have the information to plan effective and efficient marketing to achieve this aim.

Developing long-term loyalty: By targeting the right customers, offering them what they want and encouraging them to take more of your products, you will protect your customer database. Your customers will be more likely to stay with you for longer.

Encouraging profitable business growth: Increasing the number of loyal and valuable customers you have and limiting the number of customers with low value and/or high risk to achieve the profitable growth of business. This increases turnover and profit, which can be reinvested to ensure that service and product standards are maintained and ensure that your customers stay happy.

Elements of Direct Marketing Program

Establish your market objective:

• Estimate the size of the market. There are two ways of doing it- (i) increased conception of existing users

(ii) increased conception of the market.

Evaluate the market place:

(i) Business environment (ii) Competitive analysis- who are they? Entry barrier. (iii) Customer-market segments- SEC, demographics, psychographics, identifying TG. (iv) Product-use behavior- heavy & medium user. (v) Product & market phase (vi)Evaluating past performance- % response rate, sales, no. of requests for information, no. of qualified leads, new customers acquired, lapsed customers, customer acquisition cost (ratio of marketing cost &

customer acquired), Customer lifetime value evaluation.

Developing a Communication Strategy:

• Identifying TG

• Positioning of the brand

• Key selling proposition (USP)

Types of Direct Marketing

Direct marketing can be applied to all three key business sectors:

• Business to consumers

• Business to intermediaries

• Business to business

Approaches to Direct Marketing

Stand-Alone Direct Marketing

This could be regarded as the “ultimate" Direct marketing approach. Organizations that employ this type of approach employ no other means to manage the relationship with their customers. Companies such as ‘First Direct’, ‘Direct Life insurance’ or Bazee.com fall under this category. Here the customers are directly recruited via direct response press advertising, direct mail or the internet. Thereafter, the relationship is managed using a combination of telephone, mail, e-mail etc.

Integrated Direct Marketing

In this approach Direct Marketing is viewed as a part of an integrated marketing mix. Organizations such as 'Save the child', 'Readers Digest', ‘Pizza-Hut’ are seen to adopt this approach.

Peripheral Direct Marketing

In this type of approach, Direct Marketing is employed as only an occasional, tactical marketing tool. Here direct marketing could be initiated as a short-term response to decreasing sales or competitive pressures. Hindustan Lever and many other FMCG companies adopt this form.

IMC Model

Review of Marketing Plan- Objectives, role of advertising & promotions, Competitive analysis, assess environmental influences.

Analysis of Promotional Program Situation-

Internal AnalysisExternal Analysis

Promotional dept. orgzn. Consumer behavior

analysis

Firm’s ability to implement Market segmentation &

promotional program target marketing

Agency evaluation & Market positioning

selection

Review of previous programResults

Analysis of Communication Process:

Analyze receiver’s response process

Analyze source, message, channel factors

Establish communication goals & objectives

Budget Determination

Develop IMC Program- Set objectives, determine budget, develop medium/media

Integrate & Implement Marketing Communication

Monitor, Evaluate & Control IMC Program

The Role of Direct Marketing in the IMC Program

Advertising & Marketing

IMC considers all sources of brand or company contact that a customer/prospect has with a product/service. It is a way to coordinate and manage the marketing communications program to ensure that they give customers a consistent message about the company and/or its brands.

Consumers’ perceptions- a synthesis of the bundle of messages they receive- media advertisements, price, package design, direct marketing efforts, publicity, sales promotion, websites, POP displays & the store itself.

IMC is a centralized messaging function.

The Promotional Mix consists of :

Advertising

Direct Marketing

Internet Marketing/ Interactive Marketing

Sales Promotion

Publicity/ Public Relations

Personal Selling

Combining Direct marketing with Advertising:

Direct Marketing is a form of advertising through mail, print or TV- Direct response ad.

Combining Direct Marketing with Internet/Interactive:

Direct marketing makes use of online promotions through websites, interactive CDs/DVDs/kiosks to

seek a response or complete a sale. Online catalogues promote the product/service to elicit a response.

Combining Direct Marketing with Public Relations/ Publicity:

Public relations activities and Publicity oriented activities employ direct marketing & direct response techniques.

Combining Direct Marketing with Personal Selling:

Telemarketing & direct selling is an aspect of Personal selling. In multi-stage selling, direct mailers are used to invite prospects or after direct selling efforts, direct mailers are sent as a follow-up & reminder.

Combining Direct Marketing with Sales Promotion:

Direct mailers inform a prospect of sales promotion events/activities or invites a prospect by way of contests & prizes & gifts as incentives. In sales promotion implementation, direct marketing tools are employed to inform customers.

Lifetime Value in DM

Lifetime value (LTV) is a calculation of the value of a customer to you over the projected life of that customer (the time he/she spends with you). For example, a credit card customer who maintained a Rs.500 outstanding balance on his/her credit card may with fee & interest payments, generate Rs.75/- or more for the credit card issuer each year. If the credit card customer kept the card active for 8 years, then the LTV of the customer to the issuer is Rs.75/- times eight or Rs.600/-.

Lifetime value of a new customer is defined as the net present value of all future contributions to overhead & profit.

The four most important factors contributing to a customer’s lifetime value are:

Future Forecast Revenue Expenses Profits Cost of Capital

When planning your marketing plan, it is important to consider how much revenue you can get from a customer over the life of that customer. Because that helps to determine how much you can afford to acquire him/her. This is the qualifying process.

The most important use of this concept of LTV is in the areas of ‘Customer Reactivation’ & ‘Customer Acquisition’. How much is it worth to get an additional customer? A rule of the thumb is that a firm should invest no more than 40% of LTV in customer acquisition.

In Direct Marketing, repeat customers are a foundation of a firm’s business. Therefore, in D.M. repeat business is usually a major consideration & the primary source of profitability of a firm. The more the customer can spend with you over their lifetime, the more valuable they are to you and the more you can afford to spend to generate them. Also knowing, whether you will be selling additional products or services to those customers

should have an impact on how to approach them for the initial sale. Here are some ways a good salesperson determines what the LTV of a customer might be:

• Can I sell this customer my product/service several times?’

• Can I upsell this customer to a more expensive product once he/she buys the first one?

• Can I sell the customers additional (add-on) products/services?

• Does my product/service generate one-time revenue or an on-going revenue stream?

• Will this sale to this customer lead to additional sale to other customers?

LTV is therefore a measure of the total worth to an organization of its relationship with a particular customer. If this analysis is conducted right across the database a key advantage accrues. Organizations can employ an LTV analysis to increase their overall profitability by getting rid of customers who will never be profitable and concentrating resources on recruiting and retaining those that will be profitable to the organization.

Advantages and disadvantages of in-house versus bureau database management.

Management Advantages Disadvantages

In-House o A customized

approach is possible

o Day-to-day

controlo Data can be

moved easily

o High cost of

developmento Lack of internal

expertiseo Name and address

handling is difficult

Bureau o Easier to enforce

service-level agreements

o Share costs of

hardware o Experience

o Conflicting

demands from other clients

o On-line access

sometimes difficult

o High operating

costs

Personal Selling vs. Group selling

1. Face-To-Face Selling (Personal selling)The original and oldest form of direct marketing is the field sales call e.g. Eureka Forbes, Real Value - Ceasefire. Today most industrial companies rely heavily on a professional sales force to locate prospects, develop them into customers, and grow the business; or they hire manufacturers' representatives and agents to carry out the direct-selling task addition, many consumer companies use a direct-selling force: insurance agents, stockbrokers, and distributors working for direct-sales organizations such as, Oriflame, Avon etc.

2. Group Selling A. Exhibitions and Trade Shows

Exhibitions are a hybrid medium. Some exhibitions are like broadcast media advertising. The aim is merely to put products on show to a large number of customers and excite their interest. Many national consumer exhibitions are of this kind. There may be a direct marketing component. You can ask consumers show-ing interest to give their name and address to stand staff. These can then be distributed to local dealers for follow-up, or customers may receive a mail-shot to

sustain their interest and trigger a visit to an outlet where they can buy.

Increasingly, especially in business to business, exhibitions are used as an integral part of the contact strategy. Prospective or existing customers are targeted through your database or rented lists. They are invited to the exhibition and perhaps asked to confirm their attendance. An appointment with stand staff may even be booked. After the exhibition, depending on the success of the visit, there may be a follow-up contact (sales force, telephone or mail). You should use exhibitions when:

Sales calls are expensive and you want to get many customers visiting you rather than you visiting them;

You want to attract new customers and the exhibition has proven quality attendance. In this respect, the exhibition functions like a rented list;

Complex concepts are being demonstrated, so instead of individual demonstrations having to be mounted all over the country, many customers can see the demonstration in one location.

e.g. Opel, Honda, Tata, Consumer Durables

B. Sales seminars and other company-sponsored special events

These include the following:o the straightforward sales seminar, where a concept

is described and perhaps audio-visual techniques are used to demonstrate it in action;

o the physical demonstration of the product, often held in your sales office or at the factory;

o awareness and training events, where your aim is to educate customers so that they can appreciate the value of your company offering. This is the 'soft sell' approach;

o entertainment, e.g. visits to sporting and cultural events. Here your aim is to reward your customer for loyalty and to further cement the relationship.

All these have much in common with exhibitions from a direct marketing view point. The difference is that, being sponsored by you, all those attending must be invited by you or your business partners (very common in business-to-business marketing). To ensure the right quality of attendee, direct marketing is the medium most commonly used to market such events. E.g. British Airways, Time–share Club selling.

DEFINITIONS IN DIRECT MARKETING

1. Database: An aggregation of data on a computer organized into a specific usable format. It also refers to a specific table structure on a computer.

2. Database Marketing: The process of using data to help in your marketing decisions and activities.

3. Operational database: This database is concerned with the management of service transactions containing data such as order, shipping, and accounting records. It is likely to be widely accessed by individuals throughout the firm and is particularly essential to the management of the fulfillment and billing functions, since if often provides real-time information in respect of the state of customer's order and account. The operational database usually contains details of all the transactions a customer might have with an organization independent of specific product categories.

4. Data Mining: The process of looking carefully at existing data to discover marketing opportunities.

5. De-duplication: De-duplication is the act of ensuring that the database does not contain duplicate records

of the same customer. A special de-duplication program has to be run by the computer to ensure duplicate customer records are kept to a minimum.

6. Merge-purge: Merge-purge is merging two files, perhaps two external or one external and your own internal database into one. Extracting all additional information of a single customer is ‘merge’ and eliminating all common information is ‘purge’ to hold one single record of that customer. You therefore want to make sure you do not have the same customer twice in the final file.

7. Verification: Verification is to ensure that the data has been accurately entered in the database. This is the standard procedure.

8. Validation: Validation is checking the accuracy of personal and product data provided by the customer.

9. Data Warehouse: A data warehouse is an amalgam of the master customers file, marketing database, operational database, customers’ database. It is built for the purpose of analysis or as a central resource that other applications might share. It could be a batch warehouse (i.e. constructed for a specific

purpose) or an on-line warehouse designed to provide support for a range of on line-activities.

10. Inserts: A separately printed marketing piece that is inserted into an existing delivery vehicle like in another publication, usually a newspaper, for delivery.

11. Cross-selling: Cross selling is the process of selling related, peripheral items to a customer. The strategy of pushing new products to current customers based on their past purchases. Cross-selling is designed to widen the customer's reliance on the company and decrease the likelihood of the customer switching to a competitor. While selling a product to the customer, you can check out their preferences and come up with suitable products to cross- sell to your customers. This helps in the retention of the customer.

12. Up-selling: Up-selling is a direct marketing practice wherein a salesman tries to tempt a customer into upgrading their purchases or buying add-ons amounting to greater cost and quality. It provides customers with options that they might otherwise not have considered. The salesman simply

ups the price of the product by offering better products or services. Up-selling need not be manipulative. Rather, it should simply be suggestive. Since the customer is already buying a product, he or she is generally "handled with care" by the salesman who tries to super-size the purchase. "Your choice of jacket is excellent, madam. Incidentally, we have the same jacket with fur for just Rs.400 more."

13. Site Traffic Generation: No matter how cool your site or how fabulous your product is, you're not going to generate enough sales to make your business viable unless you can generate traffic. You have to get the word out about your site and give people a reason to visit it. The good news is, there are lots of ways to effectively advertise your site online and drive much of qualified traffic to your site, all for free! And by qualified, I mean people who belong to your target market and who are most likely to buy the products or services you offer. These are the people you want coming to your site. Site generation also is created through advertising i.e. by advertising about your site to attract your target market.

14. SPAM: Unsolicited e-mail, often of a commercial nature, sent indiscriminately to multiple mailing lists, individuals, or newsgroups; junk e-mail. E-mail that is not requested. Also known as "unsolicited commercial e-mail" (UCE), "unsolicited bulk e-mail" (UBE), "gray mail" and just plain "junk mail," the term is both a noun (the e-mail message) and a verb (to send it). Spam is used to advertise products or to broadcast some political or social commentary. Like viruses, spam has become a scourge on the Internet as hundreds of millions of unwanted messages are transmitted daily to almost every e-mail recipient as well as to newsgroups. Unfortunately for users and fortunately for spammers, as an advertising medium, spam does produce results. Even if only an infinitesimal number of users reply, it is still cost effective since e-mail is a very inexpensive way to reach people. As spam filtering becomes more sophisticated, spammers have to send even more spam to make the same money, but e-mail lists can be purchased for very little or hijacked, and there is a thriving ancillary business selling lists to spammers. There are even third-party spam service providers that will do all the work for you.

15. Lead Generation: Lead generation involves a combination of targeted communications delivered

at one time with the goal of generating a response. Multimedia lead generation involves the use of several lead-generating tools simultaneously.

16. Lead Qualification: Lead Qualification is designed to screen out bad leads or non-serious prospects. Lead Qualification is used to disqualify bad leads or to grade leads according to some criteria.

17. Response lists: Response lists are names derived from a company’s/ organization’s files. It is a list of people who are known to have responded to previous similar marketing events, including your own.

18. House lists: A list of a firm’s own customers is called a house list.

19. Compiled lists: Compiled lists are compilations derived from numerous sources such as public information sources such as telephone directories, voter lists, automobile registrations, pan card, gas ownership etc

20. RFM: It refers to three key factors that determine the usage success of response lists, namely, recency, frequency & monetary. Recency

refers to how long ago the people on the list made their last purchase through direct marketing response media. The more recent the purchase, the better. Frequency refers to how often the prospect buys through direct response media, such as mail or phone etc. Monetary refers to how much money the prospect on the list has spent on the direct marketing purchase.

21. List owners: A list-owner is a mail-order or telemarketing firm, a broadcast direct-response marketer, a magazine or book publisher or other firm that makes its customer list available to the commercial list-rental marketplace.

22. List Managers: List managers represent the list owners and are considered experts who understand how to get the most out of lists. They interact with list brokers and keep track of all aspects of the process relevant to the owner. List managers are most likely to recommend only the lists they manage.

23. List Brokers: List brokers rent lists to firms for list owners. List brokers are list experts. They know what lists are available, how the lists tend to

perform, and how they can be best used. List brokers act as consultants to direct marketers, advising them on what response lists are available and which would most likely work for a particular offer.

24. List Depth: Marketers using a list first mail or telephone the names expected to be most productive and then move down the list until the incremental response rate is equal to the break-even response rate. This is what is called list depth in direct marketing.

25. Response rate: This is the number of responses that come from each piece of mailing or each call made. This helps in calculating the list depth.

26. Infomercial: A long format television commercial, usually 30 minutes or longer providing advertisers with a more conversational way of communicating detailed information, advice, and discounts on products & services. They are designed to elicit a direct order/inquiry from a viewer.

27. Direct Response Print Media: It is a major direct marketing medium. It involves the placement of an

advertisement in a magazine, newspaper, or some other similar printed medium.

28. DRTV: It is more than an ordinary television commercial. It asks for an immediate decision from individuals. It aims to talk directly to a more specialized target audience and contains a telephone number to encourage viewers to place orders or request for more information. It is a good medium to encourage sales or generate leads.

29. Stand-alone approach: This could be regarded as the “ultimate" Direct marketing approach. Organizations that employ this type of approach employ no other means to manage the relationship with their customers. Companies such as ‘First Direct’, ‘Direct Life insurance’ or Bazee.com fall under this category. Here the customers are directly recruited via direct response press advertising, direct mail or the internet. Thereafter, the relationship is managed using a combination of telephone, mail, e-mail etc.

30. Integrated approach: In this approach Direct Marketing is viewed as a part of an integrated marketing mix. Organizations such as 'Save the

child', 'Readers Digest', ‘Pizza-Hut’ are seen to adopt this approach.

31. Peripheral approach: In this type of approach, Direct Marketing is employed as only an occasional, tactical marketing tool. Here direct marketing could be initiated as a short-term response to decreasing sales or competitive pressures. Hindustan Lever and many other FMCG companies adopt this form.

32. Internet: A large network of interconnected computers. The Internet, particularly the World Wide Web, is gaining mass-market acceptance. The web-sites are designed to entertain, to inform, and to sell.

33. Viral marketing: Viral marketing refers to marketing techniques that use pre-existing social networks to produce increases in brand awareness or to achieve other marketing objectives through self-replicating processes. Viral marketing may take the form of video clips, interactive Flash games, advergames, e-books, brandable software, images, or text messages.

34. SMS: SMS is the written text service, which is sent from mobile to mobile and also, though less

widely used, from PC to mobile and from digital TV set-top box to mobile. This is often called 'message to mobile'. As this channel is fairly new, it has the benefit of increased cut-through and impact on its audience who may still be receiving marketing through SMS for the first time. With SMS comes the promise of personal and local marketing that is both interactive and immediate. However, because this is an incredibly personal channel, care should be taken to ensure the message is targeted to the right person, at the right time, with the right offer, or else the message can be lost and damage done. Results have shown that the more interaction you have with the receiver, and the more value you add, the better the response.

35. Direct marketing: “Direct Marketing is the total of activities by which the seller in effecting the exchange of goods and/or services with the buyer, directs efforts to target audience using one or more media (direct selling, direct mail, telemarketing, direct-action advertising, catalogue selling, cable TV selling, mobile marketing etc) for the purpose of

soliciting a response by phone, mail or personal visit from a prospect or customer.”

36. Precision targeting: Direct marketing communications are frequently aimed at individuals. This is particularly true of direct-mail and telemarketing campaigns based on the use of segmented lists that come from information contained in databases. Targeted marketing reduces the waste that occurs in other forms of communications.

37. Geo-demographic segmentation: Geo-demographic segmentation is based on experience showing that consumers who live next to one another have similar incomes, needs, and lifestyles. It describes the demographics of households in specific geographic areas by the Pin code/Zip code.

38. Catalogs: A brochure containing pictures/photographs, descriptions, and prices of products and services for sale, usually an array of merchandise with a specialized focus, although some may contain general merchandise. They are extensively used for consumers & businesses.

39. Telemarketing: Telemarketing is the application of telephone to direct marketing efforts. It may be ‘Inbound’ or ‘Outbound’. Inbound is when customers call a firm to place an order or to request for more information or customer service. Outbound is when a firm calls customers and prospects to make a sale or to offer information which it hopes will lead to a sale.

40. LTV: It is an estimate of the net present value of all future contributions to profit & overhead that a firm can expect from a new customer. LTV is a strategic planning tool used to support decisions about customer acquisitions.

41. Prospect: A business or consumer that, for one reason or another, you believe will be responsive to marketing about your product or service.

42. Seeds: Names and addresses added to a mailing or other marketing list so that marketers can track the deliverability of their marketing event.

43. Response device: Any material, such as a coupon or reply card, that is designed to be completed by a prospect and returned to a marketer to begin or complete a sales interaction.

44. Relational database: A database consisting of tables of information linked together by a common data element, such as a customer number or telephone number.

45. Business reply envelope: A mailed envelope for the sender, to use it to reply to a marketing solicitation by sending back a coupon, an order form, a cheque or a message.

46. Acquisition cost: Measure of the amount of money it takes to acquire a customer, an order, or a lead.

47. Fulfillment: The process of sending consumers a product or service they have ordered.

48. Market Segmentation: The process of sub-dividing a larger market of customers or prospects into smaller units, usually with similar characteristics, which makes marketing to them easier.