Direct Marketing and Internet Marketing - Term Paper Example

Direct Marketing and Internet Marketing Executive Summary The introduction of Internet applications and e-commerce in the mid 1990s impacted the business world considerably. The technology platform has provided a base for new means of marketing, revenue earning, and communicating with the existing and potential consumers. Increased connectivity and customer service approach has re-defined the way businesses are operating today. Marketing strategies have evolved in context of the changes taking place in the business environment. The paper provides an introduction to an evolving marketing strategy – direct marketing and Internet marketing that has changed the way goods and services are being bought and sold today. 2. Terms of Reference Marketing strategies for business-to-business (B2B) models and business-to-consumer (B2C) models have witnessed impressive changes over the past few decades. For the purpose of illustrating the new strategies two companies have been selected in each of the categories. Microsoft is a good example of B2B business while ebay.com is an example of B2C model. 3. Methods and Procedures The discussion provides a theoretical framework to explain concepts like direct marketing and Internet marketing. It goes on to explain the various aspects of this marketing strategy and how it benefits the sellers and buyers and its relative impact on the B2B and B2C business models. 4. Introduction The organizations today are witnessing rapid changes in the types of markets in which they operate. Globalization of economies and liberalization of markets has resulted in easy accessibility of markets across the world. Most of the economies have de-regulated their markets leading to a more open global economy. This is one of the biggest factors that has facilitated world trade and opened new opportunities for businesses. The organizations to cater to the changing market environment are increasingly focusing on quality, value, relationships and customer satisfaction to gain competitive advantage in the industry (Loudon et al., 2005). Among the strategies adopted by the marketing managers to reach their customers the most prominent is direct marketing of goods and services. Internet marketing too has proved highly effective in making use of technology to promote organizational sales and revenues. 5. Literature Review 5.1 Marketing Marketing is a wide term encompassing a host of different strategies and activities targeted towards the sale of goods or services. It relates to the movement of goods from the manufacturing units to the end consumers. The American Marketing Association (2007) defines marketing as “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” This definition relates marketing to a network of activities and processes that help in the process of value addition to the consumers and the producers. Hence marketing is not a “group of unrelated activities but tasks that are planned and executed to attain identifiable objectives” (Loudon et al., 2005). The marketing process involves strategic planning and management of different elements such as product, pricing, promotion, and distribution. The marketing department of the organization is instrumental in planning the types of products that should be sold by the company, the prices at which these products should be sold, and the methods or strategies adopted to reach the ultimate consumer. The primary objective of marketing is to meet the requirements of the customer and the needs of the marketplace. The goals of marketing include generating revenues for the business and satisfying the needs of the consumer (Loudon et al., 2005). 5.2 Direct Marketing Direct marketing refers to the communication methods adopted by organizations to reach the specific individuals or enterprises who are the target consumers. The innovative use of technology has enhanced the process of communications to the extent where organizations can directly reach the consumers through a wide variety of media available. Direct marketing has been defined by Bird (2004) as “any advertising activity which creates and exploits a direct relationship between you and your prospect or customer as an individual.” An organization using direct advertising methods to reach the customer is using direct marketing strategy. Bird and Koekemoer (2004) have defined direct marketing as an “interactive system of marketing designed to create and keep customers by developing long-term, personal relationships with each of them through increasingly relevant product or service offerings.” This definition focuses on the interactivity element present in direct marketing between the marketer and the consumer and its influence on buyer decision. Hence direct marketing stimulates the buyer to respond to the marketer and make a decision on the purchase of the goods or services offered for sale (Bird et al, 2004). 5.3. Internet Marketing Internet marketing or e-commerce can be defined as “any exchange of information or business transaction that is facilitated by the use of information and communication technologies” (Curtis and Cobham, 2003). Large numbers of businesses are going online with the use of e-commerce web applications that enable them to connect directly to their consumers and establish a medium of exchange at the click of a mouse. Consumers can now bank online, purchase travel tickets, make hotel bookings and reservations, process financial transactions, besides purchasing consumables ranging from clothes, books, CDs, electronic products among a list of others. E-commerce has opened new vistas of marketing management and strategic planning that enable extensive consumer reach and unlimited potential for entrepreneurs. 5.4. The Difference between Direct Marketing and Traditional Marketing The age-old concept of buying and selling has undergone a sea change in the past decade. The traditional mode where the consumer interacted with the product specialists before making a purchase decision has been replaced by a simple browser that has taken the corporate IT systems to the consumer via the Internet. Many corporations are leveraging their products and services across the Net and following a web marketing strategy now has become the norm. Over the past few years’ businesses have succeeded in harnessing the Internet to create new sales channels and acquire new customers. 5.5 Growth of Direct Marketing The principle of direct marketing began with the mail order business where the companies distributed pamphlets and promotional literature addressed and handed directly to the consumer. The concept evolved over time and took on new dimensions with the emergence of computer and other innovative technology media. The Internet and mobile phones provided the companies with a new mode of communicating directly with their targeted customers and this became a popular channel for promoting sales and distributing product information (Baker, 2003). 5.5.1 Facts and Figures For the past two decades direct marketing has become extremely popular and extensively used by organizations across the globe. Direct marketing accounted for nearly 55 percent of the total expenditure on advertising in USA in the year 2003 (Bird et al, 2004). 5.5.2 Reasons Direct marketing involve tele-calling, direct mails using brochures or catalogues, direct response broadcasting on television or radio, e-commerce websites, and home shopping networks (Dolak, 2009). In addition these strategies organizations focus on acquisition and retention of clients that is crucial in increasing the market share for the products. The marketing promotions emphasize product differentiation features and providing the consumers with increased value for their money. This generally constitutes of how a particular product is better and different from its alternatives or choices available in the market. It assesses the functional aspects of the product. It also represents the kind of image the consumer will have on seeing the product on display and distinct its qualities in terms of value and benefits from other competitive brands. All these have contributed to the growing popularity of this marketing strategy. 5.7 Benefits of Direct Marketing Direct marketing models presently use innovative technology to present their products and services to the consumers. This has opened a number of possibilities and opportunities in terms of extended business reach, increased product or service differentiation factor, higher demand potential, and greater value positioning. All this relates to increased consumer appeal and revenue generating potential. The benefits of direct marketing include extended and personalised consumer reach that evokes immediate response or action from the potential buyer. 6. Macro environmental analysis 6.1 Pest Analysis The globalization of the market owing to the extensive reach of the Internet, information, and product details accessible to consumers across physical borders translates to increased sales and revenue figures for the sellers online. They can now reach any corner of the globe to display and sell their products ensuring wider scale of operations and greater market share. The consumers have a wide range of choice shopping with abundance of information available online and the promotional literature provided by the sellers allows them to compare products and prices before they make a purchase decision. This feature has provided the consumers the benefit of convenience and wasting of unnecessary time in commuting to the stores. This essentially provides the consumers with better customer service and increased value for their money. Compared to a regular brick and mortar store the electronic-store is available for service 24 hours a day and seven days a week. The consumer can log onto these stores at any point of time according to their convenience and make purchases from the comfort of their desktops at home or office. Technology has been the enabler of changes in the marketing strategies today. 7. Direct marketing strategy 7.1 Importance of Data marketing and internet marketing for businesses E-bay.com deals directly with consumers where the customers login to the website and make purchases online. These goods are directly delivered to the consumers. The website uses database application software to track the consumer purchases and maintain a record of other transactions made by the customer earlier. This enables the sellers to maintain records on the consumer purchase and activity and trace a pattern in making purchase. This also helps the company in understanding consumer behaviour and needs and expectations. The system allows the sellers to interact with the consumers based on this information thus maximising chances of retaining customers and developing suitable strategies to acquire new customers. 7.1.1 Database Development Database marketing helps the sellers to assimilate vital information related to user habits, preferences, choices and other personal statistics that is used by the sellers to design appropriate strategies to reach the consumer directly. The strategy is effective in studying the consumer behavior on Net, the effectiveness of advertising and promotional campaigns, marketing strategies and overall presentation of the products or services on the Net. The information is derived from various sources such as online activity data, credit card data, and related searches on the Internet that provides the sellers with a vital clue to the user needs and expectations. It provides answers to questions like who is the customer, what is his requirement, where can this requirement be fulfilled (Baker, 2005). A distinctive advantage of database marketing lies in its cost advantage – since the system provides all the necessary information the seller does not need to spend much on researching the consumer behaviour. 7.2 Customer Relationship Development (CRM) The short term objective of the marketing department is to acquire customers while the long term objective translates to retaining the old customers through effective customer relationship management (CRM) strategies. “Reaching and acquiring a new customer is one thing, keeping the relationship healthy and strong over a long period of time is the mark of the true marketing professional concerned with long term health of the organization” (Dolak, 2009). The increasing competitive market makes it difficult to retain customers over a longer period of time owing to the constant influx of new and substitute alternatives invading the shelf spaces at the local retail shop. This makes the task of CRM increasingly challenging and organizations adopt various strategies to attract old customers back. Retention strategies often employ measures such as consumer behaviour research and product surveys that enable the organizations to assess the needs and expectations of the consumer and enable them to serve better. Customers always appreciate the personal touch that results in building strong relationships. The net today provides numerous effective communication channels that are being used to keep the customer happy. Web based customer relationship management has effectively integrated all modes of communication – web, email, chat, video, voice to serve and support the customers to enhance the total customer experience. 7.3 Partner Relationship Management (PRM) Partner relationship management (PRM) is a business strategy to improve communication between the sellers and their channel partners. There are various software applications that enable smooth collaboration and constant communication between the two parties that helps in meeting schedules, overcoming issues and transferring vital information related to sales and marketing. Relationship management is an important aspect of direct marketing since it provides long term benefits and customer loyalty that is critical for retention strategies. B2B business like Microsoft focuses on PRM strategies to increase market share, monitor sales activities and ensure efficient marketing operations. PRM is integrated with CRM to provide increased functionality and usability to the organizations. 8. Conclusion The marketing strategies adopted for ebay.com and Microsoft are similar in the use of direct marketing tools. Direct mail programs, web-commerce and database marketing are the tools that can improve sales and revenues for both the businesses. One of the critical factors that drive marketing strategies is an in-depth understanding of the consumer behaviour and market trends that are significant to the analysis of markets and help the organization to define appropriate strategies to gain competitive advantage. Advertising and creating consumer awareness for the products in the specific markets is essential to carve a market niche. This requires consolidated efforts from the sales and marketing team. Positioning the brand and creating brand awareness of the intended product involves great deal of planning and execution of advertising campaigns that will assist customers in recognizing the brand and creating brand loyalty. Effective brand loyalty strategies include identification of target client group, market acquisition, and understanding client needs and alternatives available in the market. This type of market research will enable the company to understand the specific market needs and choices available to the customer in the market. Consequently the marketing department can design effective direct marketing strategies to reach their customers and create an impact that influences their purchase decision. 9. Recommendation In today’s marketing environment, there are numerous and uncountable brands endorsing their products and services. Integrated marketing communications is a strategy that can be effectively used by both B2B and B2C businesses to optimize the promotion and advertising campaigns run for a specific brand or service. The overall objective of this strategy is to project the brand image to the receiver of messages from the company. “Whether the consumer is viewing an advertisement or talking to a call centre that is handling the company’s customer helpline, or whether it is the manner in which complaints are handled and service is recovered, there should be little doubt that the communications come from the same company” (Mudie & Pirrie, 2006). Communicating to the customer about what to expect from the services delivered by the company is vital since it helps in establishing realistic expectations. This makes it easier for the company to deliver and meet to the expected standards. Customers always appreciate the personal touch that results in building strong relationships. The net today provides numerous effective communication channels that are being used to keep the customer happy. Web based customer relationship management has effectively integrated all modes of communication – web, email, chat, video, voice to serve and support the customers to enhance the total customer experience. 10. Bibliography 1. AMA. 2007. Definition of marketing. Accessed on November 19, 2009 from http://www.marketingpower.com/AboutAMA/Pages/DefinitionofMarketing.aspx 2. Loudon, David; Stevens, Robert; and Wrenn, Bruce. 2005. Marketing Management: Text and Cases. The Haworth Press Inc. USA. 3. Bird, Steve and Koekemoer, Ludi. 2004. Marketing Communications. Juta Academic. 4. Dolak, Dave. 2009. Direct Marketing. Accessed on November 19, 2009 from http://www.davedolak.com/directm.htm 5. Graham Curtis and Cobham (2003) Business Information Systems – Analysis, Design and Practice 4th Edition 6. Mudie, Peter and Pirrie, Angela. 2006. Service Marketing Management. Third Edition. Oxford, Butterworth Heinemann. 7. Bird, Drayton. 2004. Commonsense Direct Marketing. 4th edition. Kogan Page Limited. 8. Scott, Meerman David. 2007. The New Rules of Marketing and PR. John Wiley and Sons. New Jersey. 9. Baker, Michael John. 2003. The Marketing Book. 5th edition. Butterworth-Heinemann. 10. Nash, Edward. 2000. Direct Marketing – Strategy, Planning, Execution. 4th edition. McGraw Hill. Read More