The Pros and Cons of Direct Marketing and Legal Issues That Accompany This Field - Essay Example

The pros and cons of Direct Marketing and legal issues that accompany this field and Section # of The pros and cons of Direct Marketing and legal issues that accompany this field Direct marketing is as the name suggests a direct means of approaching and selling to a customer. This type of marketing eliminates the use of the middlemen in the market since the products are marketed and sold to consumers directly as in one on one. There are seven elements of direct marketing that are means to market and sell directly to the consumer namely; direct mail, catalogs, telemarketing, interactive TV, kiosks, web sites and mobile devices. Direct order marketing is also a related term since the elements of direct marketing churn up a response from the customer whether positive or negative that depends on various aspects but when its positive then it is definitely a customer order that the direct marketer receives for the benefit of the company. The significance of direct marketing is beyond just selling a product because it is used by companies to enhance relationship marketing that is forming and maintaining long term relationships with customers through effective public relations activities and direct marketing assists these activities. Companies send cards and cakes on special occasions to their customers through direct mail and this incurs a positive rapport with the customers. Direct marketing not only serves the basic purpose of a company to inform the customer but also to generate positive feelings with the customers for the company (Kotler & Keller; 2002). History of Direct Marketing Direct marketing roots from Europe during the middle ages or most popularly known as feudalism period and then it began to enter its golden age during the renaissance. This was the 15th century and direct marketing became a regular practice in Europe only after the invention of moveable type by Guttenberg. The first catalog in Europe was then printed in 1450. The concept of direct marketing was originated by Lester Wunderman. Lester implemented these innovative techniques over two famous brands namely; American Express and Colombia Records. The concept was originated by this man during 1961 in America but direct marketing became a regular practice only after the typewriter was invented in 1867. The credit for the first catalog through mails goes to Aaron Montgomery Ward in 1872. Since the concept was gaining popularity amongst the businesses in America so the Direct Mail Advertising Association was established in 1928 which now is known as Direct Marketing Association. With direct marketing in full speed the most popular terms of today started to emerge and took permanent shape. Junk mail was a term used by people since 1954 and the term spam took birth in 1993 so it's still young. Since the customers became more and more aware and educated the companies had to work even harder to convince them to buy their products. The market was no longer nave and direct marketing played an essential role to maintain goodwill amongst the customers in order practice effective public relations activities and retain customers. Thus, by the 18th century direct marketing was rocketing towards the sky and it was the most popular means of advertisement and maintaining public relations. Benjamin Franklin was the first printer to stand out of the rest of the printers in Colonial America and he came up with the most famous catalog in 1974 that was close to the present day catalogs that contain information and attractive punch lines that are all intended towards customer satisfaction. Companies then began to receive orders and send products through mail. It was during the 1830's that various companies mailed the products to their customers in New England. The general feeling of disdain and detest against the middlemen started in the post civil-war period in Midwest Europe with the farmers who decided to eliminate middlemen since the farmers were buying at a higher price and then selling at a lower price because of the middlemen. Direct marketing was a blessing in disguise for these farmers and till today businesses practice direct marketing as a regular feature of all businesses. Thus direct marketing emerged as a growing field and survived the tests of time to become one of the most popular and important methods of marketing and selling products while keeping in mind customer convenience and satisfaction. Relevance of Direct Marketing Direct marketing is either face to face with the customer or from a distance that is through various elements of direct marketing as already discussed above. When it is done face to face with the customer then the response rate is low comparatively and costs are high. But from a distance and through the elements of direct marketing costs can be saved and response rates depends on various aspects but they are comparatively higher than the former. Direct marketing helps make a business become much more efficient and also assists in the basic purpose of enhancing relationships with customers and improving sales through triggering brand loyalty amongst them. Companies can use various ways and means to practice direct marketing to suit their financial and physical constraints. The right choice of a channel for direct marketing helps to cut down costs immensely and since communication methods have a come long way, the 21st century is the age of effective and efficient communication through various ways and means. Marketing and building communication campaigns are easier to achieve now since there are innumerable channels of communication. Direct marketing is its in its boom and companies are using it to market and sell products, communicating and building long term relationships with customers and also to help generate goodwill amongst customers for the company. Direct marketing helps to reach all customers of the target market or segment completely, easily and at lower costs. Direct marketing has enabled companies to reach out to each and every consumer of their target market effectively and efficiently. It is easier for companies to inform and market their products to each and every customer at lowest cost. This is a major advantage to companies since reaching out to each and every customer was a dilemma for companies before because uninformed customers means lost sales and diminishing goodwill. Customization is the latest phenomenon to have swarmed the market since every other company is seeking to satisfy their customers and give them what they desire in order to throng brand loyalty. Direct marketing has increased the prospects and chances of converting potential customers into actual consumers. Since direct marketing has enabled companies to reach out to each and every potential customer of the target market and that also at the lowest costs then the chances of conversion from potential to actual consumer have increased. Companies have all the more customers now since they can inform them all and also convince many reluctant ones to buy from them. Direct marketing has made life easier for the marketing managers. The importance of the sales force has increased since products sent through mail require an effective sales force that is automated and efficient. As a result of the growing significance and relevance of direct marketing the expenditure on this type of marketing by the companies around the world has also increased immensely. Companies in Australia spend nearly 50% of their available funds on direct marketing and the figure in the United States of America goes as high as nearly 60% (Edwards; 1997). Pros and Cons of Direct Marketing Direct marketing has more advantages than disadvantages since it is a helpful tool to companies all over the world. The advantages/pros of direct marketing are as follows: The major advantage to the customer of direct marketing is that in this century with a busy fast paced life it is much more convenient to place an order from home and then receive the order by mail at home. Due to the ever increasing traffic jams and workload with aggressive competition one hardly has the time to visit a shop. Direct marketing has made life easy for able and willing consumers. Direct marketing has more advantages for the companies or the sellers. This is the age of communication and information is available easily so direct marketers can purchase the list of their potential customers since it contains all information that is useful for companies to sell their products. Companies can learn about personal information, physical characteristics and preferences of their potential customers and then market their products through direct marketing accordingly. They can also add personalized messages to form a relationship with the potential customers. This is most effective since it generates a positive feeling and goodwill amongst customers and this usually leads the customer to purchase from the company. Direct marketers can build and maintain long term relationships with their customers that results in brand loyalty. For e.g. companies send a card and a cake on birthdays to their customers. Direct marketing is an effective tool and if it is used at the right time or trigger point and also to interested potential customers than it can result in humongous sales. This is effective use of direct marketing to target the right audience at the right time to generate a phenomenal response from customers. Direct marketing can be done through various means and if the right channel, medium and element of direct marketing are used then marketing can be cost-effective for companies. All these elements can be tested to end up with the most feasible and cost-effective method of direct marketing. Often when companies market their products through advertising or other public relations activities the profit motive of the marketers and the company is visible to consumers but direct marketing enables marketers to market their products to customers having been able to keep their actual strategy, purpose and offer obscure. Direct marketing generates goodwill since it gives an impression that the company cares for the customer and is actually working to satisfy the customer only. Direct marketing has enabled marketers to give a numeric figure to the responses from their customers that they target. This gives them a definite figure to prove the market share, sales and profits of a company. They can also prove that their company is doing considerable well compared to competitors. The major advantage to companies from direct marketing is that they do not have to share their profits with the "middlemen" or better known as "intermediaries." Direct marketing also helps companies achieve control over their own marketing. The disadvantages/cons of direct marketing are as follow: The promotional material used in direct marketing like pamphlets, catalogs etc all involve costs that the company has to bear in order to practice direct marketing. Distribution or delivery of this material also involves a cost like regular costs for direct mail or an automated sales force etc. The company must bear these costs to deliver the material and market directly to their customers. Some customers despise direct mail and call it "junk mail" and this incurs a negative feeling since they are irritated by these mails. Legal issues involved with Direct Marketing There are specific legal issues involved with direct marketing and the companies have to bear certain costs. The United States Postal Service requires the companies to bear most of the direct mail or postage costs. When it comes to email and faxing as a means of direct marketing then the company has to bear if not any direct costs but the costs of having the internet connection, paper and other printing costs. The supreme court in America has passed a legislation in the favor or consumers who do not want direct mail or junk mail and they can fill out a form with the heading "Prohibitory Order" that will disallow the non-governmental organizations to send these customers any more mail and also that these NGO's must eradicate the particular customers personal information. This order helps customers protect their privacy and also to avoid junk mail. There is a national do-not-call list in the USA and the consumers who get themselves registered on this list then it's illegal for companies to telephone them for marketing their products. This brought about a huge cry amongst telemarketers because around 62million people got themselves registered on this list. But they had no choice but comply with the law. Canada has also come up with a similar list. Invading privacy is a major issue and legislation helps avoid this problem. The costs of surveillance are much higher than dataveillance since surveillance requires much more physical and financial resources. This law has helped protect privacy of the people. In Europe the organization of economic cooperation and development (OECD) has laid down principles for companies to abide by while marketing their products directly. Companies are supposed to work towards the satisfaction of the customers, all corporate objectives must be met through satisfying customers, human beings are more important than corporate objectives, to make sure direct marketing is not intrusive with the privacy of individuals, consumers have the right to go against the marketers if they feel intimidated, direct marketing must give primary importance to the interests of customers and companies must justify intrusion of consumer privacy. Ethical issues involved with Direct Marketing Consumers are often irritated by the methods of direct marketing and especially direct mail or specifically junk mail. It is unfair that direct marketers take advantage of impulsive buyers by sending them attractive advertisements or promotions and this is manipulating the customer. Direct marketing is also at times deceptive and fraudulent because marketers tend to mislead customers by sending them exaggerated details. This generates a negative feeling and also a feeling of distrust with the customer. Direct marketing invades privacy since sending mails requires personal address, telemarketing requires personal contact numbers, personal behavior and preferences is also known to direct marketers via marketing databases of consumer behavior and companies often maintain profiles of customers that has their entire information (Kotler & Keller; 2002). Thus, direct marketing is useful for companies in many ways but it has various effects on consumers. The major concern is privacy since direct marketing aims to sell the product directly and that leads to publicity of personal information and also that consumers are manipulated. But direct marketing is convenient to both the consumers and the companies as well. References Philip Kotler & Kevin Lane Keller (2002) Marketing Management. London: Prentice Hall. Pgs 605-606. Benefits of Direct Marketing Retrieved February 18, 2008, from < http://web.utk.edu/barnaby/CH21/sld004.htm> Disadvantages of Direct Marketing Retrieved February 18, 2008, from < http://en.wikipedia.org/wiki/Direct_marketing> Ethical issues involved with Direct Marketing Retrieved February 18, 2008, from < http://www.anu.edu.au/people/Roger.Clarke/DV/DirectMkting.html#Intro> History of Direct Marketing Retrieved February 18, 2008, from Legal issues involved with Direct Marketing Retrieved February 18, 2008, from < http://en.wikipedia.org/wiki/Direct_marketing> Legal issues involved with Direct Marketing Retrieved February 18, 2008, from < http://www.anu.edu.au/people/Roger.Clarke/DV/DirectMkting.html#Intro> Pros and Cons of Direct Marketing Retrieved February 18, 2008, from < http://tutor2u.net/business/gcse/marketing_promotion_direct_marketing.htm> Relevance of Direct Marketing Retrieved February 18, 2008, from < http://www.anu.edu.au/people/Roger.Clarke/DV/DirectMkting.html#Intro> Read More