Download PROBLEM OF CUSTOMER INFORMATION OVERLOAD

PROBLEM OF CUSTOMER INFORMATION OVERLOAD AND INTERACTIVE
MARKETING AS ITS SOLUTION
Authors: DR. DARSHANA DAVE 1 and DR. CHAITANYA VYAS 2
Abstract
In this study, we examined how customers treat direct mail, particularly, catalogs received from
the marketers. We conducted a survey among 462 respondents from different occupation, age,
education, and income in six cities of Gujarat, India. Analysis of the responses is done for
disturbance level, frequency, interactivity, and effectiveness of catalogs received from direct
marketers. Finally, recommendations are made to the direct marketers as to how to put
customers’ feedback for direct mail in practice in order to improve catalog-marketing efforts.
Key terms: direct mail, telemarketing, information overload, interactive marketing, permission
marketing
1
2
Associate Professor, Department of MBA, Sardar Patel University, Gujarat, India.
Associate Faculty, Entrepreneurship Development Institute of India
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INTRODUCTION
Technical definition of Direct Marketing is - “Direct marketing is the planned implementation,
recording, analysis, and tracking of customers’ direct response behavior over time to derive
future marketing strategies for developing long- term customer loyalty and ensuring continued
business growth.”1
According Drèze Xavier, Direct mail is the largest and e-mail is the second largest marketing
vehicle. Firms such as directmarketing (UK) offer postal and e-mail addresses of managers of all
the departments of almost all type of industries of UK. 2 Rogers (1996) examined trends in mail
advertising from a study of The U.S. household mail communications inspecting how consumers
feel, perceive, and respond to the advertising mail received by them. 3 Results show that
households with higher income received more advertising mail. Compared to the mail addressed
to occupant or residence, the mail addressed to household members fetched better and higher
response. Receivers gave more response to the mail from non-profit organizations compared to
the mail from business organizations. For successful campaigning through mail, testing, and
quality database are better alternatives. Advertisers should make mail more relevant to the mail
recipients. Some advertisers have related radio advertisements and television commercials with
mail campaigns. It is important for the consumers that they get less clutter, appropriate type, and
timing of mail, and ability to respond these in the way they want.
Taylor et al conducted a survey among Japanese and the U.S. university students to check the
impact of Japanese communication and Japanese culture on attitudes toward direct marketing
and its regulation. 4 The results suggest that certain types of direct marketing messages are less
effective in Japan than in the United States. Further, willingness by Japanese respondents to
support regulation of direct marketing practices is greater. The authors discuss managerial
1
Stone Merlin, Davies Derek, and Bond Alison, Direct Hit: Winning Direct Marketing Campaigns, MacMillan
India, 1998, p 3.
2
www.electricmarketing.co.uk
3
Rogers Jean, Mail Advertising and Consumer Behavior, Psychology and Marketing, vol 13, No. 2, March
1996, p 211–233.
4
Taylor Charles R, Franke George R, and Maynard Michael L, Attitudes Toward Direct Marketing and Its
Regulation: A Comparison of the United States and Japan, vol 19, No. 2, Journal of Public Policy &
Marketing, Fall 2000, p 228-237.
Page 2
implications of the findings for multinational marketers and advertisers. They suggest public
policy implications for direct marketing in Japan.
Direct Marketing Associations worldwide
In India, Direct Marketing Association is registered as a public limited company and adjudged as
a non-for-profit organization. National and international firms are its members. The association
regularly publishes reports containing overview of direct marketing in India, and marketing
directories. It also provides customized services. Direct Marketing Association of South Africa
(DMASA), which expands and promotes interactive marketing and direct marketing in South
Africa, became an independent body in November 2005. It represents interactive marketers,
direct marketers with a consumer focused approach protecting and regulating interactive
marketing and direct marketing. The DMASA provided education, information, and legal
opinions on the issues such as data privacy, database protection, anti-spam etc. to its members.
Companies join this Association and agree to sign an acceptance of compliance. Australian
Direct marketing Association (ADMA) makes its members aware about the legislation which
may have effects on members’ business. ADMA provides members the tools to help them
comply with laws and excel in their respective industry. ADMA has developed an industry Code
of Practice and an independent Code Authority. ADMA’s State Branches are in Victoria,
Tasmania, New South Wales, South Australia, West Australia, and Queensland. ADMA also
offers certificate, other short term courses, and training. Direct Marketing Association (DMA) of
the U.K. is there since 1992. There are more than 800 members of DMA in the U.K. Members
include agencies, mailing houses, large corporations and brokers. DMA is engaged in training
and development. This association is the member of the International Federation of Direct
Marketing Associations (IFDMA) and the Federation of European Direct and Interactive
Marketing (FEDMA). In the U.S.A., the Direct Marketing Association (DMA) promotes
maintaining and following standards for marketing with responsibility, and providing relevant
and desirable offers to the consumers. The DMA is involved also in providing education and
research, and training. It was founded in 1917. Businesses and nonprofit organizations, which
use direct marketing tools and techniques, are associated with the DMA. It maintains
Commitment to Consumer Choice (CCC) Program. This program aims at consumer
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empowerment and builds consumer trust with direct marketers. Members of DMA are expected
to follow regulations and protect consumer privacy and preferences.
Direct mail
Direct mail is one the powerful marketing communication tools. Direct mail is equally effective
while targeting B2B or B2C type of communications. The marketing challenge is to execute
direct mail campaigns which will give desired results. The problem with direct mail is they are
often not solicited. Direct mails are considered as unwanted marketing communication.
Marketscan conducted research of 1,000 marketing professionals on direct mailings. The
research found that direct mailings are considered to be lowest-risk type of communication,
especially for B2B communications.1 Leena Basrur, Managing Director, SIREM Marketing
Services, Mumbai, a member of the InterDirect network of DM agencies says – constant
telemarketing through mobile phones is becoming annoying to consumers though the irritation
level for direct mail is minor in India.2 Flood of direct mailers and irritation from those; have
resulted in making “Do Not Mail” mandatory in western countries.
For multinational corporations, the media strategists have to consider forming an international
media strategy. It is possible to find the difference in perceptions of the customers regarding
media. Light and Somasundaram examined perceptions of young adults in four countries – India,
Hong Kong, Canada, and the U.S. Authors compared perceptions regarding direct mail and
advertising in other media channels such as in newspapers, magazines, television, radio, and
outdoor media. 3 The study found that there are significant differences in perceptions, specific to
media in those four countries.
1
Direct Mailings Carry 'Lowest Risk' for B2B, Precision Marketing, June 4, 2004, p 5
Indian market wakes up to the digital age, Precision Marketing, May 4, 2007, p 9
3
Light David and Somasundaram T N, International Direct Marketing Strategy: A Comparison with Alternative
Media, Journal of Direct Marketing, vol 8, No. 1, 1994, p 71–78
2
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LITERATURE REVIEW
Marketing discipline is observing a shift from broadcast marketing to interactive marketing
Deighton at el (1996).1 Factors such as direct marketing, database marketing, e-commerce, sales
force management, World Wide Web etc. are forcing the marketing discipline to reshape. Mass
marketing is becoming more customized and more responsive to the customers. Authors
explained interactive marketing with reference to conversation with an ability to address and
remember individual’s response. At the same time, over interaction from marketers is also not
expected. On the nation that – Business goes where business is invited, Grassfield Max (2000)
developed the strategy called Invitational Marketing for retailers. 2 Invitational Marketing is
about inviting customers to give them opportunities to satisfy their needs. This invitation must be
made with personal written note instead of through impersonal direct mails as advertising is oneway communication. Advertisers must communicate with the customers rather than counting
them as the customer figure. Customers are part of the society for the marketers. Along with
other reasons, one of the reasons behind losing customers is not treating them with value. The
author noted that Reichheld and Sasser (1990) related increasing profit with longer customer
relationship. A unique thing about his company - Grassfield's was that they knew their customers
better than their competitors did. This company collected information from voluntary customers
for around ten years. They collected details regarding customers’ buying patterns, personal data,
sales record etc. They have their own concept of sending individual customers a personalized
message with the salesperson’s signature. In 1992, they developed their own customer relation
database software, which is copyrighted and registered as Invitational Marketing. They offered
the incentives to the respondents of the messages sent to their customers in order to measure how
much effective it was to send personal message. Customers always like to visit the place where
the marketers know them by their name. The advantage of invitation marketing is that it also
reduces, if not eliminates, the information overload. Information overload can affect consumer
choice. Lee Byung-Kwan and Lee Wei-Na (2004) investigated effect of information overload on
the quality of consumer choice online by combining traditional and structural approaches. 3 They
measured customers’ satisfaction, and confidence. It was found that the consumers get too much
1
Deighton at el, The Future of Interactive Marketing, Harvard Business Review, vol 74, no. 6, Nov- Dec 1996,
p 151-160.
2
Grassfield Max, Invitational Marketing, Coloradobiz, 1st Mar 2000.
3
Lee Byung-Kwan and Lee Wei-Na, The Effect of Information Overload on Consumer Choice Quality in an
On-Line Environment, Psychology & Marketing, vol 21, No. 3, Mar 2004, p 159-183.
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information on number of products from different parties such as manufacturers, retailers,
internet intermediaries etc. How well the product information is presented to the customers and
how they process the information may decide survival and profitability of the companies. The
authors found that effect of information overload on consumer choice could be well predicted by
attributes like quantity and level distribution. Online information overload generated less
satisfaction, less confident, and more confusion among the customers. Creating an effective
C.I.S. (Customer Information System) helps reducing information overload. Bessen, Jim (1993)
described that to create computerized customer information system is expensive and difficult. 1
Marketing has become harder due to increasing market segments and the products. Manufactures
remain in fix as to what to produce. Buyers have to select among the number of products and the
advertisers have to select among many segments and many products. New information system
differs from traditional one based on scale of the database, depth of information, and degree of
information use. Companies such as The Great Atlantic & Pacific Tea Company (A&P), R. R.
Donnelley & Sons, and Fingerhut have used this. Companies need broad customer information
system as market demands targeted marketing communications. Consumers’ demographic and
psychographic information should be used to understand what consumers want and for how
much. In the industries like supermarkets, information overload creates information crisis for
manufacturers and managers. Hagel and Rayport (1997) observe that customers take control of
their information. 2 Infomediary companies can work as custodians, agents, and brokers of
consumer information. On behalf of the customers, they can market it to the companies.
Companies must think which type of information they are collecting form the customers, when,
and how they are going to use the information.
Similar to the concept of Invitational Marketing, the concept of Permission Marketing also
supports the notion that - Business goes where it is invited. Seth Godin coined the term
Permission Marketing, which is asking for prior consent or permission from customers before
sending them marketing messages. Permission marketing is not just Direct marketing. S. F. Allen
1
Bessen, Jim (1993), “Riding the Marketing Information Wave,” Harvard Business Review, Sept-Oct 1993, vol
71, p 150-60.
2
Hagel John III and Rayport Jeffrey F, The Coming Battle for Customer Information, Harvard Business Review,
Jan- Feb 1997, p 53-65.
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(2002) drew a line between permission marketer and direct marketer.1 Marketers have to know
the difference between these two and using direct marketing or permission marketing or both.
Allen said that permission marketers put their resources into developing revered relationship
with the customers. Forcefully dumping the products in front of the customers, in spite of the
customers’ dislike will end into broken relationship with the customers. Though customers will
be ready to buy the forced products once or twice for a short period, they may not prefer over
long run. By using force, marketers will lose positive long term marketing results. The base of
permission marketing is trust. Ultimately, the trust is converted into profit. Marketers must know
how to use this profitable methodology of permission marketing. Allen said permission
marketing is a fine blending of conventional branding and consumer behavior with modern
internet marketing techniques. As described by Allen, three pillars of permission marketing are –
First – cutting through clutter. Second – empowering customers with choice. Third – shifting
power of decision making to marketers. While practicing permission marketing through email
marketing, the connection among the marketers, the advertisers, and the customers is established.
Customers eagerly pay attention to such marketers who use permission marketing messages.
Moreover, the comparative revenue earned through permission marketing is higher than that of
direct marketing over time. Permission marketing has stronger ability to rise among the clutter
and get more attention. In a way, customers are handling over powers in the hands of the
marketers to take some decisions up to certain extent and the marketers cannot hold and continue
this power if they fail to win the customers’ trust. Permission marketing is long-run strategic
investment for the marketers. Ansari and Mela (2003) state that customized communications can
mitigate information overload and help customer decisions. 2 They developed statistical approach
for information customization on internet and applied model to permission-based e-mail
marketing. It is possible to increase click-through rates with the help of content-targeting
approach.
1
Allen S F, Don't Call Yourself a Permission Marketer When You Are a Direct Marketer, Financial Times
Prentice Hall, Aug 2, 2002.
2
Ansari A, and Mela C F, E-customization, Journal of Marketing Research, vol XL, May 2003, p 131-145.
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METHODOLOGY
Hypotheses are formed based on literature on problem of information overload and Interactive
Marketing as its solution. Respondents were asked questions such as – What is the frequency of
receiving catalogs/direct mails? Where do they receive direct mails more? Whether they find
direct mail interesting and useful? Do they feel disturbed by receiving direct mails and want to
discontinue receiving them? What is their opinion about having ban over direct mail? etc.
Hypotheses are developed to check link between Information Overload, and ways of Interactive
Marketing practices. With the help of Chi-Square test, four factors causing Information Overload
are cross-tabulated with four ways of Interactive Marketing practices independently.
As shown in the table below, variables such as – finding direct mails interesting, getting
disturbed by direct mails, frequency of direct mails, and willingness to stop receiving direct
mails are categorized as factors causing Information Overload while variables such as finding
direct mails useful, opinion about having ban over direct mails, occupation of the customers, and
place of receiving direct mails are categorized as ways of Interactive Marketing practice.
Table 1 Interactive Marketing as a solution for Information Overload problem
Factors causing Information overload
Finding direct mails interesting
Getting disturbed by direct mails
Frequency of direct mails
Willingness to stop receiving direct mails
Ways of Interactive Marketing practices
Finding direct mails useful
Opinion about having ban over direct mails
Occupation of the customers
Place of receiving direct mails
Hypotheses
Following four hypotheses are developed to test linkages of information overload problems with
interactive marketing practices.
Hypothesis 1
H0: There is no significant relationship between customers’ finding Direct mails
interesting and finding Direct mails useful
H1: There is a significant relationship between customers’ finding Direct mails interesting
and finding Direct mails useful
Hypothesis 2
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H0: There is no significant relationship between Customers’ getting disturbed by Direct
mails and their opinion that Direct mails should be banned
H1: There is a significant relationship between Customers’ getting disturbed by Direct
mails and their opinion that Direct mails should be banned
Hypothesis 3
H0: There is no significant relationship between Frequency of receiving Direct mails and
Occupation of the Respondents
H1: There is a significant relationship between Frequency of receiving Direct mails and
Occupation of the Respondents
Hypothesis 4
H0: There is no significant relationship between Place of receiving Direct mails and
Customers’ willingness to stop receiving Direct mails
H1: There is a significant relationship between Place of receiving Direct mails and
Customers’ willingness to stop receiving Direct mails
Results
The above four hypotheses are tested using Chi-Square test. Following are the results of data
analysis. Table 2 lists Mean and Standard Deviation. Tables from Table 3 to Table 6 show results
of Chi-Square test.
Table 2 Mean and Standard Deviation
Variables
Place of receiving Direct Mail
Disturbed by Direct Mails
Finding Direct Mails interesting
Finding Direct Mails useful
Frequency of receiving Direct Mails
Reading Direct Mails completely
Thinking Direct Mails should be banned
Want to stop receiving Direct Mails
Age of the Respondents
N
462
462
462
462
462
462
462
462
462
Mean
1.20
2.71
2.81
2.81
2.40
2.18
2.81
2.80
33.21
Sd*
0.400
1.028
0.608
0.607
0.803
0.739
1.079
1.203
7.251
*Standard Deviation
Chi-Square Statistics
Table 3 Finding Direct Mails interesting and Finding Direct Mails useful
Finding Direct Mails interesting * Finding Direct Mails useful
Finding Direct Mails Finding Direct Mails
Test Statistics
interesting
useful
Chi-Square
166.558a
168.325a
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df
2
2
Asymp. Sig.
.000
.000
a.
0 cells (.0%) have expected frequencies less than 5.
The minimum expected cell frequency is 154.0.
Table 4 Disturbed by Direct Mails and Thinking Direct Mails should be banned
Disturbed by Direct Mails * Thinking Direct Mails should be banned
Disturbed by
Thinking Direct Mails
Test Statistics
Direct Mails
should be banned
Chi-Square
325.229a
92.424b
df
4
3
Asymp. Sig.
.000
.000
a.
0 cells (.0%) have expected frequencies less than 5.
The minimum expected cell frequency is 92.4.
b.
0 cells (.0%) have expected frequencies less than 5.
The minimum expected cell frequency is 115.5.
Table 5 Frequency of receiving Direct Mails and Occupation of the Respondents
Frequency of receiving Direct Mails * Occupation of the Respondents
Test Statistics Frequency of receiving Direct Mails Occupation of the Respondents
Chi-Square
202.329a
82.307b
df
3
4
Asymp. Sig.
.000
.000
a.
0 cells (.0%) have expected frequencies less than 5.
The minimum expected cell frequency is 115.5.
b.
0 cells (.0%) have expected frequencies less than 5.
The minimum expected cell frequency is 92.4.
Table 6 Place of receiving Direct Mails and Want to stop Direct Mails Cross tabulation
Place of receiving Direct Mails * Want to stop Direct Mails Cross tabulation
Asymp. Sig.
Chi-Square Tests
Value
df
(2-sided)
a
Pearson Chi-Square
26.991
4
.000
Likelihood Ratio
31.000
4
.000
Linear-by-Linear Association
4.404
1
.036
N of Valid Cases
462
a.
0 cells (.0%) have expected count less than 5.
b.
The minimum expected count is 10.16.
As seen in the above tables all four hypotheses have significant relationship among the
respective variables. So, null hypotheses for all four hypotheses are rejected. From the
Hypotheses testing results, following is proved:
1. There is a significant relationship between customers’ finding Catalogs interesting and
finding Catalogs useful by the customers (Hypothesis 1).
2. There is a significant relationship between Customers’ getting disturbed by Catalogs and
their opinion that Catalogs should be banned (Hypothesis 2).
3. There is a significant relationship between Frequency of receiving Catalogs and
Occupation of the customers (Hypothesis 3).
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4. There is a significant relationship between Place of receiving Catalogs and Customers’
willingness to stop receiving Catalogs (Hypothesis 4).
Hence, it is also proved that implementing Interactive Marketing practices help reducing or
eliminating Information Overload to customers, particularly with reference to direct mail.
CONCLUSION
The senders of these unwanted Catalogs/Direct Mails are mainly insurance companies, private
sector banks, housing loan companies, Mutual Fund companies, magazine publishers, consumer
durables manufactures, automobile companies etc. All the customers who strongly agree or agree
that they get disturbed by promotional Catalogs think that unwanted Direct Mail sent by
marketers should be banned. Customers are neutral about their opinion on whether catalogs are
interesting or useful. Majority (58%) customers do not read direct mails completely before
disposing those off. Majority (80%) customers receive direct mails at their home while
remaining customers receive those at their workplace. Customers have neutral opinion about
usefulness and interesting matter of these direct mails. 50% customers receive direct mails once
in a month while remaining 50% includes those receiving direct mails twice in a month plus
those who receive those more than twice in a month.
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p 151-160.
Direct Mailings Carry 'Lowest Risk' for B2B, Precision Marketing, June 4, 2004, p 5
Grassfield Max, Invitational Marketing, Coloradobiz, 1st Mar 2000.
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Indian market wakes up to the digital age, Precision Marketing, May 4, 2007, p 9
Lee Byung-Kwan and Lee Wei-Na, The Effect of Information Overload on Consumer Choice Quality in an
On-Line Environment, Psychology & Marketing, vol 21, No. 3, Mar 2004, p 159-183.
Light David and Somasundaram T N, International Direct Marketing Strategy: A Comparison with
Alternative Media, Journal of Direct Marketing, vol 8, No. 1, 1994, p 71–78
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Taylor Charles R, Franke George R, and Maynard Michael L, Attitudes Toward Direct Marketing and Its
Regulation: A Comparison of the United States and Japan, vol 19, No. 2, Journal of Public Policy &
Marketing, Fall 2000, p 228-237.
Page 12