Direct Mail and Email Advertising - Research Paper Example

Table of Contents Executive Summary 2 Introduction 3 Email Advertising 3 Advantages of Email Advertisement 4 Disadvantages of Email Advertising 5 Direct Mail 5 Advantages of Direct Mail 6 Disadvantages of Direct Mail 7 Recommended Choice 7 Conclusion 8 References list 9 Appendices 10 Table of Illustrations Fig 1: ROI of Different electronic advertising Methods (Tepfer, 2013)………………………….6 Fig 2: Internet World Stats (2014)………………………………………………………………...7 Fig 3: Preferred Methods of Communicating with Existing Customers…………………………8 Executive Summary Purpose of the Report This report analyses two methods of advertisement – direct mail and email advertising. It also proposes the best method for a retailer dealing with electronic devices. Direct Mailing The report examines direct marketing as a method of sending advertising messages to potential and existing customers through direct mail. It highlights the major advantages and disadvantages of this method as a traditional method of advertisement. This method is costly and customers may not read the intended ad message. Email Advertising This method involves conveyance of advertisement messages through email. With the rise of internet technology, emails are becoming easy and fast methods of sending emails. It is less costly and generates more customer response than direct mail advertising. Recommended Choice Email marketing is considered as the most suitable method of advertisement because it is less costly, easy, fast and effective. It generates more customer responses than direct mail and earns more returns on investment. However, the retailer should avoid sending email messages too often, and send only relevant information targeted at specific individual customers who demonstrate interest in the company’s products. Introduction Working as a marketing consultant in Big Consultant Company, my aim is to advise a retail marketer in the High Street who has approached our company for consultancy services. The client wants to choose the best method to advertise his retail products to target customers. He is faced with a rhetoric situation in which he has to choose between direct mail and email advertising to advertise his products. The retailer sells electronic devices including computers, mobile phones and tablets to customers on order. He already has a large number of customers within his neighborhood, but he wants to expand to other neighborhoods. He has already generated a large database of potential customers including university and college students. He is now wondering which method he should use to communicate with them. Direct mail and email advertising are his most preferable methods. This report examines the two alternatives in detail and compares them in terms of pros and cons in order to determine which one of them is suitable for the client. It also analyses the benefits and challenges of email and direct mail advertising, and the alternative with most benefits and least challenges will be recommended. The report will also suggest the best way of implementing the chosen method of advertising. Email Advertising Email advertising is refers to the process of sending a message to promote a product or service electronically to a group of people using via email (Sterne & Priore, 2000). A marketer using this method of advertising sends a message describing various features of his products and services to potential customers in order to convince them to purchase his products. Advertisements sent through email target current customers to enhance repeat purchase and potential customers to attract new customers. Email advertising uses internet technology to pass a promotional message to customers. The retailer needs to develop a database of potential and existing customers with their details including physical address, telephone number, email address, characteristics and preferences. This information is needed to write customized advertisement message to each potential and existing customer (Sterne & Priore, 2000). One email message can be sent to more than one recipient with similar features, attitudes, interests and preferences. Technology has changed over the past few decades with the advancement internet technology, causing both challenges and benefits to email marketing (Sterne & Priore, 2000). Competition in the retail industry is increasing every day as new retailers enter the market and existing retailers expand in terms of production and market capacity. These strategies require effective strategic actions, and one of them is technological development and internet marketing development. Email advertisers therefore face a big challenge of convincing customers amidst increasing number sent to customers each day by several competitors in the industry. Advantages of Email Advertisement One of the major advantages of using email advertisement is that it enhances a personal environment of conversation between the customer and the retailer. Compared to instant messaging and social media technologies, email provides a personalized communication approach through the in-box. The advertiser and the customer usually have unique email address with a password so that they can send messages to each other without other people seeing it. This promotes privacy and confidentiality so that the customer can trust the retailer. Email advertising also enables the retailer to track his returns on investment. This is possible because the details of each customer are contained in each email and the retailer will know when the customer has responded and the quantity of sales generated by each email. In this case, the retailer can know if his advertising campaign is bringing returns or not. If the email advertisement is done properly, the ROI is usually high. The choice of email advertising among marketers is attributed to the high level of ROI. According to Direct Marketing Association (2014), ROI of email marketing reached 2,500% in 2014. Fig 1: ROI of Different electronic advertising Methods (Tepfer, 2013) The figure above shows that the return of investment for email is higher than any other method of advertisement. It records 40% compared to the second highest of $22.24% which is SEO. Another advantage of email advertising is that it is cheaper and faster than direct mail because it does not require long processes of artistic works, writing and printing. It just requires an email address for both the sender and the recipient, which is usually free to create. The only cost that can be incurred is the money spent on accessing internet network, which is usually cheaper than postal services, and the opportunity cost of time spent in writing the email. The time spent in writing email is also short because one message can be sent to multiple recipients at the same time. Furthermore, email advertising reaches several customers within a short period of time. A message sent through email reaches the recipient’s email address immediately after sending, in about a minute. Therefore, every time the recipient opens his or her email address, he or she gets the message, whether in a week, a day or even within a few minutes. This means that the advertiser can receive feedback faster. Disadvantages of Email Advertising One of the major disadvantages of email marketing is that it does not reach customers who do not access the internet. Although internet use has risen significantly throughout the world, there are people who may be potential customers but they do not have regular access to the internet. Therefore, the retailer may not be able to access such customers without the use of traditional mailing system. As shown in the figure below, customers using the internet are in millions, but there are regions where the internet is still minimally used, meaning that email advertising cannot reach everyone. Fig 2: Internet World Stats (2014) Email advertising also results in spamming problems. If the advertiser sends emails too often in search of customers without passing targeted information, the message can be considered as a spam. Some emails which do not add value to the customer are thrown to thrash and may discourage customers from buying the advertised products. Direct Mail Direct mail is also known as advertising mail. It is a traditional form of mail marketing whereby a business firm sends an advertisement message to customers through postal service and other delivery services. Direct mail is designed in a customized manner depending on the customers’ profession, location, income, age and buying behaviour (Gao & Ji, 2010). Some of the advertising items sent to customers through the direct mail include free-trial CDs, advertising circulars, credit card applications, and other business invitations. These advertising messages and items are sent to the customer at home or at their workplaces. Postal services provide lower rates for advertisers who purchase bulk mail orders. In this case, the marketer needs to sort and format their mails in specific ways that can reduce the handling required by postal services. Advertisers can reduce costs of mailing by narrowing the target audience and selecting recipients who are most likely to respond positively to the direct mail. Advertises send mail messages to people who have shown interest in their products. For example, the retailer can use database analysis to select recipients who have demonstrated interest in mobile phones, tablets, computers and other electronic devices. Direct mail addresses specific needs of such customers and explains how the retailer can meet the needs of the customer regarding electronic devices. Advantages of Direct Mail One of the advantages of direct mail is that it allows the retailer to send advertisement messages to different types of customers including those who do not have a regular access to the internet. Direct mails reach customers in their physical homes and businesses whether they have internet access or not. This increases customer base and increases the sales of the company. Customers do not have to possess an internet network in order to access direct mail advertisement, making it easier for them to respond to the mail offer. Email marketing is the most preferred method when communicating with existing customers because it enhances personalized message and it targets customers with proven interest in the company. This is shown in the figure below. Fig 3: Preferred Methods of Communicating with Existing Customers This figure shows that most advertisers (32%) prefer using direct mail to communicate with existing customers. Only 6% of marketers prefer using the internet. Direct Mail advertising also enhances personalized and targeted message delivery. Unlike mass media advertisement, the direct mail marketing will enable the retailer to address the specific features of his product that are most desired by the targeted customer. This calls for immediate response from the target customer. Direct mail builds a strong relationship between the electronics retailer and his customers by targeting specific customers enabling immediate response from them. Another advantage of direct mail is that it is highly informative. Unlike emails, direct mails carry a lot of information and attractive artistic designs that carry important messages targeted at specific customers. The retailer can attach CDs, sales letter, and images of its products to demonstrate how the electronic devices meet specific needs of customers. Brochures are also attached to provide informative message about the product, including pictures of the electronic devices and its features illustrated and explained using the same brochure. This information generates interest and response from customers. Disadvantages of Direct Mail In some cases, customers consider pieces of direct mail as junk mail. According to Kokemuller (2015), many customers do not read the direct mails they receive, and some of them do not even open them. Junk mail discourages potential customers, especially if they are not directly targeted to them. According to Suttle (2014), 44% of direct mail recipients throw away their junk mail without reading. This shows that the advertiser will waste a lot of time writing ad messages that may not even be read. Direct mail advertising is also costly (Korgaonkar, 2010). Printing and posting direct mail letters incurs a lot of costs for marketers. Postal services ask for prices for their delivery services while printing businesses charge for their printing services. Printing pictures and brochures is specifically expensive, and increase the retailer’s expenses. Recommended Choice This report recommends that the retailer should choose email advertising because it has stronger advantages and less disadvantages. Every advertising alternative for businesses have their own advantages and disadvantages, but the retailer can benefit by choosing an alternative that gives him more positive outcomes. Email advertising is therefore more preferable than direct mail marketing because it results in high rates of returns to investment (2,500%). Furthermore, many people are now changing their preferences from traditional mailing to internet-based methods of messaging. As technology improves each day, customers tend to prefer electronic messaging over traditional messaging. The retailer should use an important approach to implement email advertising in the business. One of the main challenges of this approach is that it may make the business to be branded as a spammer because it may involve sending ad messages to people who may not need it (Eastin et al, 2011). In order to avoid this, the retailer should write relevant information and should not send emails too often. The message sent through email should give the retailer valuable feedback and should contain important information for the target customer. In order to avoid annoying customers, the retailer should send emails in an appropriate time space and tailor relevant message to individual recipients. The use of email marketing can also be improved by checking emails regularly to respond to feedback from customers (Sales & Baggott, 2013). If potential customers receive the retailer’s email and respond, the retailer should act on the feedback immediately so that the customer becomes satisfied with the customer services he or she receives. Email marketing should be used as a mechanism of developing a good relationship with the customers (Sterne & Priore, 2000). Therefore, the advertiser should be sensitive with the response given by the customer and act on them immediately. The retailer should also use a convincing, simple, understandable and courteous language in the message sent to the customer. This requires effective negotiation and communication skills. The advertiser should do an effective analysis on the customer database to ensure that he understands his or her individual interests and attitudes. As a result, the retailer will be able to use the right tone of communication for each individual customer. Conclusion This report has found out that email advertising is preferable over direct advertising as a means of attracting repeat purchase and new customers in the retailer’s electronic business. Direct advertising is a traditional method of sending messages to target customers. It enhances personalized and targeted advertising but it involves high costs and most customers do not respond to traditional mails. On the other hand, email advertising involves personalized advertising and involves low cost and high returns of investment. As a marketing consultant I advise the retailer to use email marketing due to its advantages which exceed those of direct mail advertising. However, the retailer should avoid sending emails too often so that he may not annoy his potential customers. He should also write relevant information to specifically targeted individual customers who demonstrate high chances of response. References list Direct Marketing Association (2014). Email marketers optimistic about 2014 budgets as ROI hits 2,500%. Accessed April 22, 2014 from http://www.dma.org.uk/press-release/email-marketers-optimistic-about-2014-budgets-as-roi-hits-2-500. Eastin, M.S., Daugherty, T., & Burns, N.M. (2011). Handbook of research on digital media and advertising: User generated content consumption. Hershey, PA: Information Science. Gao, J.Z., & Ji, A.Z. (2010). Building an Intelligent Mobile Advertising System. International Journal of Mobile Computing and Multimedia Communications, 2(1), 40-67. Internet World Stats (2014). Internet Usage Statistics: The Internet Big Picture. Accessed April 22, 2015 from http://www.internetworldstats.com/stats.htm. Kokemuller, N. (2015). Advantages and Disadvantages of Direct Mail. Accessed April 22, 2014 from http://www.ehow.com/info_7759939_advantages-disadvantages-direct-mail.html. Korgaonkar, P.K., Silverblatt, R.K., & Becerra, E.P. (2010). The Hispanic View of E-mail, Popup, and Banner Advertising. International Journal of E-Business Research, 6(2), 45- 58. Sales, A., & Baggott, C. (2013). Email marketing by the numbers: How to use the world's greatest marketing tool to take any organization to the next level. Hoboken, N.J: Wiley. Sterne, J., & Priore, A. (2000). Email marketing: Using email to reach your target audience and build customer relationships. New York: John Wiley & Sons. Suttle, R. (2014). Pros & Cons of Direct Mail Advertising. Accessed April 22, 2014 http://smallbusiness.chron.com/pros-cons-direct-mail-advertising-1437.html. Tepfer, B. (2013). 14 Email Marketing Statistics You Need to Know. Accessed April 29, 2014 from http://www.business2community.com/email-marketing/14-email-marketing-statistics-you-need-to-know-0513966. Appendices Preference Direct Mail v Email Marketing Summary for Advantages and Disadvantages Read More