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Chapter 17
Personal Selling and Direct Marketing
Learning Objectives
1. Discuss the role of a company’s salespeople in creating value for customers and
building customer relationships.
2. Identify and explain the six major sales force management steps.
3. Discuss the personal selling process, distinguishing between transaction-oriented
marketing and relationship marketing.
4. Define direct marketing and discuss its benefits to customers and companies.
5. Identify and discuss the major forms of direct marketing.
Chapter Overview
Robert Louis Stevenson once noted, “everyone lives by selling something.” Today, most
companies use salespeople to bring their company’s offering to the consuming or
business publics. The salesperson’s role is a key one in the organization. The high cost of
maintaining a sales force means that management is especially interested in how to
efficiently organize this vital element. Six basic steps or decisions are important to the
sales management process. They are: designing sales force strategy and structure,
recruiting and selecting salespeople, training salespeople, compensating salespeople,
supervising salespeople, and evaluating salespeople. The chapter thoroughly explains
each of these critical steps in enriched detail.
As an element of the marketing mix (the promotional component), the sales force is very
effective in achieving certain marketing, communication, and promotion objectives. The
formal steps in the selling process that aid the accomplishment of these objectives are:
prospecting and qualifying, the preapproach, the approach, presentation and
demonstration, handling objections, the closing, and a follow-up. If the salesperson
follows these steps, he or she is more likely to be viewed as a problem-solver rather than
a hard-sell salesperson by the consumer.
Great salespeople have drive, discipline, and relationship-building skills. A relationship
(rather than a transaction oriented) approach in selling is a process of creating,
maintaining, and enhancing strong, value-laden relationships with customers and other
stakeholders. Relationships are more important than mere transactions. Transactions can
be completed quickly (and sometimes only once), whereas, relationships can last a
lifetime (such as the relationship between the customer and their doctor or life insurance
salesperson).
Today, there is a trend of moving away from targeting broadly with standardized
messages and marketing efforts. More and more companies are adopting direct marketing
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as a primary approach. The desire to build one-to-one relationships is very strong. The
second part of this chapter examines the nature, role, and growing applications of direct
marketing.
Direct marketing consists of direct communications with carefully targeted individual
consumers to obtain an immediate response. Interactivity is essential to this process. The
marketing manager must remember that direct marketing is not new. Catalog companies,
direct mailers, and telemarketers have been using the approach for years. However,
improved database technologies and new media (computers, modems, fax machines,
e-mail, the Internet, and online services) have changed the direction and nature of direct
marketing. Most direct marketers see direct marketing as playing an even broader role
than simply selling products and services.
Database marketing is most frequently used by business-to-business marketers and
service retailers (hotels, banks, and airlines). Companies use their databases to identify
prospects, to make decisions on which consumers will receive a particular offer, to
deepen customer loyalty, and to reactivate customer purchases.
The chapter discusses the major forms of direct marketing communication—telephone
marketing, direct-mail marketing, catalog marketing, direct-response television marketing,
kiosk marketing, online marketing (explored in Chapter 3), and face-to-face selling
(explored in the first part of this chapter). Each method is explored in detail. The chapter
concludes with a discussion of how integrated direct marketing, public policy, and ethical
issues will shape the advancement of direct marketing. The industry must not only
establish standards but must learn to police itself (or government will do it for them).
Chapter Outline
1. Introduction
a. Perhaps no industry felt the recent economic slowdown more than the
technology sector—total information technology spending has been flat
for several years. But despite the slump, CDW Corporation, the nation’s
largest reseller of technology products and services, is thriving.
b. The company owes its success to its highly effective “clicks and people”
direct marketing strategy. CDW’s direct model combines good oldfashioned high-touch personal selling with a modern high-tech Web
presence to build lasting one-to-one customer relationships.
c. Whereas many of CDW’s competitors chase after a relative handful of
very large customers, CDW has traditionally targeted small and midsize
businesses (SMBs). These smaller customers often need lots of advice and
support.
d. The major responsibility for building and managing customer relationships
falls to CDW’s sales force of nearly 2,000 account managers. Each
customer is assigned an account manager, who helps the customer select
the right products and technologies and keep them running smoothly.
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e. Account managers do more than just sell technology products and services.
They work closely with customers to find solutions to their technology
problems.
f. Customers who want to access CDW’s products and expertise without
going through their account manager can do so easily at any of several
CDW Web sites.
g. When someone says “salesperson” you may still think of the stereotypical
“traveling salesman”—the fast-talking, ever-smiling peddler who travels
his territory foisting his wares on reluctant customers. Such stereotypes,
however, are sadly out of date. Today, like CDW’s account managers,
most professional salespeople are well-educated, well-trained men and
women who work to build valued customer relationships.
h. In this chapter, we examine two more marketing communication and
promotion tools—personal selling and direct marketing.
2. Personal Selling
a. We will examine the role of personal selling in the organization, sales
force management decisions, and the personal selling process.
The Nature of Personal Selling
b. Selling is one of the oldest professions in the world. The people who do
the selling go by many names: salespeople, sales representatives, account
executives, sales consultants, sales engineers, agents, district managers,
and account development reps to name just a few.
c. People hold many stereotypes of salespeople—including some
unfavorable ones. However, modern salespeople are a far cry from the
unfortunate stereotypes. They listen to their customers, assess customer
needs, and organize the company’s efforts to solve customer problems.
d. The term salesperson covers a wide range of positions.
i. At one extreme, a salesperson might be largely an order taker, such
as the department store salesperson standing behind the counter.
ii. At the other extreme are order getters, whose positions demand
creative selling and relationship building for products and services.
The Role of the Sales Force
e. Personal selling is the interpersonal arm of the promotion mix.
i. It involves two-way, personal communication between salespeople
and individual customers—whether face-to-face, by telephone,
through video or Web conferences, or by other means.
ii. Personal selling can be more effective than advertising in more
complex selling situations.
iii. The role of personal selling varies from company to company.
f. The sales force serves as a critical link between a company and its
customers.
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i. First, they represent the company to customers. They find and
develop new customers and communicate information about the
company’s products and services.
ii. At the same time, salespeople represent customers to the company,
acting inside the firm as “champions” of customers’ interests and
managing the buyer-seller relationship.
3. Managing the Sales Force
a. We define sales force management as the analysis, planning, implementation, and control of sales force activities.
b. It includes designing sales force strategy and structure and recruiting,
selecting, training, compensating, supervising, and evaluating the firm’s
salespeople. These major sales force management decisions are shown in
Figure 16.1.
Designing Sales force Strategy and Structure
c. Marketing managers face several sales force strategy and design questions.
i. A company can divide up sales responsibilities along any of
several lines.
1. In the territorial sales force structure, each salesperson is
assigned to an exclusive geographic area and sells the
company’s full line of products or services to all customers
in that territory. A territorial sales organization is often
supported by many levels of sales management positions.
2. Salespeople must know their products—especially when
the products are numerous and complex. This need,
together with the growth of product management, has led
many companies to adopt a product sales force structure, in
which the sales force sells along product lines. The product
structure can lead to problems, however, if a single large
customer buys many different company products.
3. More and more companies are now using a customer sales
force structure, in which they organize the sales force along
customer or industry lines. Separate sales forces may be set
up for different industries, for serving current customers
versus finding new ones, and for major accounts versus
regular accounts. Organizing the sales force around
customers can help a company build closer relationships
with important customers.
4. When a company sells a wide variety of products to many
types of customers over a broad geographic area, it often
combines several types of sales force structures. Salespeople can be specialized by customer and territory, by
product and territory, by product and customer, or by
territory, product, and customer. No single structure is best
for all companies and situations.
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ii. Once the company has set its structure, it is ready to consider sales
force size.
1. Many companies use some form of workload approach to
set sales force size.
a. Using this approach, a company first groups
accounts into different classes according to size,
account status, or other factors related to the amount
of effort required to maintain them.
b. It then determines the number of salespeople
needed to call on each class of accounts the desired
number of times.
iii. Sales management must also decide who will be involved in the
selling effort and how various sales and sales support people will
work together.
1. The company may have an outside sales force (or field
sales force), an inside sales force, or both.
a. Outside salespeople travel to call on customers.
Inside salespeople conduct business from their
offices via telephone or visits from prospective
buyers.
b. Inside salespeople include technical support people,
sales, assistants, and telemarketers. The inside sales
force frees outside salespeople to spend more time
selling to major accounts and finding major new
prospects.
c. Inside salespeople may perform a wide range of
functions, from direct selling and account service to
customer analysis and acting as liaisons between
outside salespeople and customers.
d. Just as telemarketing is changing the way that many
companies go to market, the Internet offers
explosive potential for restructuring sales forces and
conducting sales operations.
2. As products become more complex, and as customers grow
larger and more demanding, a single salesperson simply
can’t handle all of a large customer’s needs. Instead, most
companies now are using team selling to service large,
complex accounts.
a. Companies are finding that sales teams can unearth
problems, solutions, and sales opportunities that no
individual salesperson could.
b. Such teams might include experts from any area or
level of the selling firm—sales, marketing, technical
support services, R&D, engineering, operations,
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finance, and others. In many cases, the move to
team selling mirrors similar changes in customers’
buying organizations.
c. Team selling does have some pitfalls. For example,
selling teams can confuse or overwhelm customers
who are used to working with only one salesperson.
Salespeople who are used to having customers all to
themselves may have trouble learning to work with
and trust others on a team. Finally, difficulties in
evaluating individual contributions to the team
selling effort can create some sticky compensation
issues.
Recruiting and Selecting Salespeople
d. At the heart of any successful sales force operation is the recruitment and
selection of good salespeople.
e. The research of Gallup Management Consulting Group, a division of the
well-known Gallup polling organization, suggests that the best salespeople
possess four key talents: intrinsic motivation, disciplined work style, the
ability to close a sale, and perhaps most important, the ability to build
relationships with customers.
i. Other skills mean little if a salesperson can’t close the sale. It takes
unyielding persistence.
ii. Perhaps the most important in today’s relationship-marketing
environment, top salespeople are customer problem solvers and
relationship builders. They have an instinctive understanding of
their customers’ needs.
f. When recruiting, companies should analyze the sales job itself and the
characteristics of its most successful salespeople to identify the traits
needed by a successful salesperson in their industry. Then, it must recruit
the right salespeople.
g. The selection procedure can vary from a single informal interview to
lengthy testing and interviewing.
i. Many companies give formal tests to sales applicants.
ii. Tests typically measure sales aptitude, analytical and organizational skills, personality traits, and other characteristics.
Training Salespeople
h. New salespeople may spend anywhere from a few weeks or months to a
year or more in training. Then, most companies provide continuing sales
training via seminars, sales meetings, and the Web throughout the
salesperson’s career.
i. Training programs have several goals.
i. Salespeople need to know and identify with the company and its
products, so most training programs begin by describing the
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company’s objectives, organization, financial structure, facilities,
and chief products and markets.
ii. They also need to know about customers and competitors. So the
training program teaches them about competitors’ strategies and
about different types of customers and their needs, buying motives,
and buying habits.
iii. Finally, because salespeople must know how to sell effectively,
they are also trained in the basics of the selling process.
j. Today, most companies are adding Web-based training to their sales
training programs. Such training may range from simple text-based
product information to Internet-based sales exercises that build sales skills
to sophisticated simulations that recreate the dynamics of real-life sales
calls.
Compensating Salespeople
k. Compensation is made up of several elements—a fixed amount, a variable
amount, expenses, and fringe benefits.
i. The fixed amount, usually a salary, gives the salesperson some
stable income.
ii. The variable amount, which might be commissions or bonuses
based on sales performance, rewards the salesperson for greater
effort and success.
iii. Expense allowances, which repay salespeople for job-related
expenses, let salespeople undertake needed and desirable selling
efforts.
iv. Fringe benefits, such as paid vacations, sickness or accident
benefits, pensions, and life insurance, provide job security and
satisfaction.
l. Management must decide what mix of these compensation elements
makes the most sense for each sales job.
i. Different combinations of fixed and variable compensation give
rise to four basic types of compensation plans—straight salary,
straight commission, salary plus bonus, and salary plus
commission.
ii. The average plan consists of about 60 percent salary and 40
percent incentive pay.
m. Compensation should direct the sales force toward activities that are
consistent with overall marketing objectives. Table 16.1 illustrates how a
company’s compensation plan should reflect its overall marketing strategy.
Supervising Salespeople
n. Through supervision, the company directs and motivates the sales force to
do a better job.
o. Companies vary in how closely they supervise their salespeople.
i. Many help their salespeople in identifying customer targets and
setting call norms.
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ii. Some may also specify how much time the sales force should
spend prospecting for new accounts and set other time
management priorities.
iii. One tool is the annual call plan that shows which customers and
prospects to call on in which months and which activities to carry
out.
iv. Another tool is time-and-duty analysis. In addition to time spent
selling, the salesperson spends time traveling, waiting, eating,
taking breaks, and doing administrative chores.
1. Figure 16.2 shows how salespeople spend their time. On
average, actual face-to-face selling time accounts for less
than 30 percent of total working time!
p. Many firms have adopted sales force automation systems, computerized
sales force operations for more efficient order-entry transactions,
improved customer service, and better salesperson decision-making
support.
i. Salespeople use laptops, handheld computing devices, and Web
technologies, coupled with customer-contact software and
customer relationship management (CRM) software, to profile
customers and prospects, analyze and forecast sales, manage
account relationships, schedule sales calls, make presentations,
enter orders, check inventories and order status, prepare sales and
expense reports, process correspondence, and carry out many other
activities.
ii. Sales force automation not only lowers sales force costs and
improves productivity, it also improves the quality of sales
management decisions.
iii. Perhaps the fastest-growing sales force technology tool is the
Internet. The most common uses include gathering competitive
information, monitoring customer Web sites, and researching
industries and specific customers.
q. Beyond directing salespeople, sales managers must also motivate them.
i. Management can boost sales force morale and performance
through its organizational climate, sales quotas, and positive
incentives.
1. Organizational climate describes the feeling that
salespeople have about their opportunities, value, and
rewards for a good performance.
2. Many companies motivate their salespeople by setting
quotas—standards stating the amount they should sell and
how sales should be divided among the company’s
products. Compensation is often related to how well
salespeople meet their quotas.
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3. Companies also use various positive incentives to increase
sales force effort.
a. Sales meetings provide social occasions, breaks
from routine, chances to meet and talk with
“company brass,” and opportunities to air feelings
and to identify with a larger group.
b. Companies also sponsor sales contests to spur the
sales force to make a selling effort above what
would normally be expected.
Evaluating Salespeople
r. Good feedback means getting regular information about salespeople to
evaluate their performance.
s. Management gets information about its salespeople in several ways.
i. The most important source is sales reports, including weekly or
monthly work plans and longer-term territory marketing plans.
ii. Salespeople also write up their completed activities on call reports
and turn in expense reports for which they are partly or wholly
repaid.
iii. Additional information comes from personal observation, customer
surveys, and talks with other salespeople.
t. Using various sales force reports and other information, sales management
evaluates members of the sales force.
i. It evaluates salespeople on their ability to “plan their work and
work their plan.”
ii. Formal evaluation forces management to develop and communicate clear standards for judging performance. It also provides
salespeople with constructive feedback and motives them to
perform well.
4. The Personal Selling Process
a. The selling process consists of several steps that the salesperson must
master. These steps focus on the goal of getting new customers and
obtaining orders from them.
Steps in the Selling Process
b. As shown in Figure 16.3, the selling process consists of seven steps.
i. The first step in the selling process is prospecting—identifying
qualified potential customers.
1. Approaching the right potential customers is crucial to
selling success.
2. The salesperson must often approach many prospects to get
just a few sales. Although the company supplies some leads,
salespeople need skill in finding their own.
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3. Salespeople also need to know how to qualify leads—that
is, how to identify the good ones and screen out the poor
ones. Prospects can be qualified by looking at their
financial ability, volume of business, special needs,
location, and possibilities for growth.
ii. Before calling on a prospect, the salesperson should learn as much
as possible about the organization and its buyers. This step is
known as the preapproach.
1. The salesperson can consult standard industry and online
sources, acquaintances, and others to learn about the
company.
2. The salesperson should set call objectives, which may be to
qualify the prospect, to gather information, or to make an
immediate sale.
3. Another task is to decide on the best approach, which might
be a personal visit, a phone call, or a letter.
4. The best timing should be considered carefully because
many prospects are busiest at certain times.
5. Finally, the salesperson should give thought to an overall
sales strategy for the account.
iii. During the approach step, the salesperson should know how to
meet and greet the buyer and get the relationship off to a good start.
This step involves the salesperson’s appearance, opening lines, and
the follow-up remarks.
iv. During the presentation step of the selling process, the salesperson
tells the product “story” to the buyer, presenting customer benefits
and showing how the product solves the customer’s problems.
1. The problem-solver salesperson fits better with today’s
marketing concept than does a hard-sell salesperson or the
glad-handing extrovert.
2. This need-satisfaction approach calls for good listening and
problem-solving skills.
3. The qualities that buyers dislike most in salespeople
include being pushy, late, deceitful, and unprepared or
disorganized.
4. The qualities they value most include empathy, good
listening, honestly, dependability, thoroughness, and
follow-through.
5. Today, advanced presentation technologies allow for full
multimedia presentations to only one or a few people.
v. Customers almost always have objections during the presentation
or when asked to place an order.
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1. The problem can be either logical or psychological, and
objections are often unspoken.
2. In handling objections, the salesperson should use a
positive approach, seek out hidden objections, ask the
buyer to clarify any objections, take objections as
opportunities to provide more information, and turn the
objections into reasons for buying.
vi. After handling the prospect’s objections, the salesperson now tries
to close the sale. Some salespeople do not get around to closing or
do not handle it well.
1. They may lack confidence, feel guilty about asking for the
order, or fail to recognize the right moment to close the sale.
2. Salespeople should know how to recognize closing signals
from the buyer, including physical actions, comments, and
questions.
3. Salespeople can use one of several closing techniques.
They can ask for the order, review points of agreement,
offer to help write up the order, ask whether the buyer
wants this model or that one, or note that the buyer will
lose out if the order is not placed now.
vii. The last step in the selling process—follow-up—is necessary if the
salesperson wants to ensure customer satisfaction and repeat
business.
1. Right after closing, the salesperson should complete any
details on delivery time, purchase terms, and other matters.
2. The salesperson should schedule a follow-up call when the
initial order is received, to make sure that there is proper
installation, instruction, and servicing.
Personal Selling and Customer Relationship Management
c. The principles of personal selling as just described are transactionoriented—their aim is to help salespeople close a specific sale with a
customer. But in many cases, the company is not seeking simply a sale: It
has targeted a major customer that it would like to win and keep.
d. The sales force usually plays an important role in building and managing
profitable customer relationships.
e. Today’s large customers favor suppliers who can sell and deliver a
coordinated set of products and services to many locations, and who can
work closely with customer teams to improve products and services.
5. Direct Marketing
a. With the trend toward more narrowly targeted or one-to-one marketing,
many companies are adopting direct marketing, either as a primary
marketing approach or as a supplement to other approaches.
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b. Direct marketing consists of direct connections with carefully targeted
individual consumers to both obtain an immediate response and cultivate
lasting customer relationships.
i. Direct marketers communicate directly with customers, often on a
one-to-one, interactive basis.
ii. Using detailed databases, they tailor their marketing offers and
communications to the needs of narrowly defined segments or
even individual buyers.
c. Beyond brand and image building, direct marketers usually seek a direct,
immediate, and measurable consumer response.
The New Direct-Marketing Model
d. Today, fired by rapid advances in database technologies and new
marketing media—especially the Internet—direct marketing has undergone a dramatic transformation.
e. Most companies still use direct marketing as a supplementary channel or
medium for marketing their goods. However, for many companies today,
direct marketing is more than just a supplementary channel or medium.
i. For these companies, direct marketing—especially in its newest
transformation, Internet marketing and e-commerce—constitutes a
new and complete model for doing business.
ii. More than just another marketing channel or advertising medium,
this new direct model is rapidly changing the way companies think
about building relationships with customers.
iii. Whereas most companies use direct marketing and the Internet as
supplemental approaches, firms employing the direct model use it
as the only approach.
Benefits and Growth of Direct Marketing
f. Whether employed as a complete business model or as a supplement to a
broader integrated marketing mix, direct marketing brings many benefits
to both buyers and sellers.
i. For buyers, direct marketing is convenient, easy to use, and private.
From the comfort of their homes or offices, they can browse mail
catalogs or company Web sites at any time of the day or night.
Direct marketing gives buyers ready access to a wealth of products
and information, at home and around the globe. Finally, direct
marketing is immediate and interactive—buyers can interact with
sellers by phone or on the seller’s Web site to create exactly the
configuration of information, products, or services they desire,
then order them on the spot.
ii. For sellers, direct marketing is a powerful tool for building
customer relationships. Using database marketing, today’s
marketers can target small groups or individual consumers, tailor
offers to individual needs, and promote these offers through
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personalized communications. Direct marketing can also be timed
to reach prospects at just the right moment. Because of its one-toone, interactive nature, the Internet is an especially potent directmarketing tool. Finally, direct marketing can offer sellers a lowcost, efficient alternative for reaching their markets.
g. As a result of these advantages to both buyers and sellers, direct marketing
has become the fastest growing form of marketing. Sales through
traditional direct-marketing channels (telephone marketing, direct mail,
catalogs, direct-response television, and others) have been growing rapidly.
Customer Databases and Direct Marketing
h. Effective direct marketing begins with a good customer database. A
customer database is an organized collection of comprehensive data about
individual customers or prospects, including geographic, demographic,
psychographic, and behavioral data. The database can be used to locate
good potential customers, tailor products and services to the special needs
of targeted consumers, and maintain long-term customer relationships.
i. A customer mailing list is simply a set of names, addresses, and
telephone numbers.
ii. A customer database contains much more information.
iii. In business-to-business marketing, the salesperson’s customer
profile might contain the products and services the customer has
bought; past volumes and prices; key contacts; competitive
suppliers, status of current contracts; estimated customer spending
for the next few years; and assessments of competitive strengths
and weaknesses in selling and servicing the account.
iv. In consumer marketing, the customer database might contain a
customer’s demographics, psychographics, buying behavior, and
other relevant information.
i. Armed with the information in their databases, companies can identify
small groups of customers to receive fine-tuned marketing offers and
communications.
j. Companies use their databases in many ways.
i. They can use a database to identify prospects and generate sales
leads by advertising products or offers.
ii. Companies can use a database to deepen customer loyalty—they
can build customers’ interest and enthusiasm by remembering
buyer preferences and sending appropriate information, gifts, or
other materials.
iii. Or they can use the database to profile customers based on
previous purchasing and to decide which customers should receive
particular offers.
k. Like many other marketing tools, database marketing requires a special
investment.
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i. Companies must invest in computer hardware, database software,
analytical programs, communication links, and skilled personnel.
ii. The database system must be user-friendly and available to various
marketing groups, including those in product and brand management, new-product development, advertising and promotion, direct
mail, telemarketing, Web marketing, field sales, order fulfillment,
and customer service.
iii. A well-managed database should lead to sales gains that will more
than cover its costs.
Forms of Direct Marketing
l. The major forms of direct marketing are shown in Figure 16.4.
i. Telephone marketing—using the telephone to sell directly to
consumers and business customers—has become the major directmarketing communication tool.
1. Telephone marketing now accounts for more than 39
percent of all direct-marketing media expenditures and 35
percent of direct-marketing sales.
2. Marketers use outbound telephone marketing to sell
directly to consumers and businesses.
3. Inbound toll-free 800 numbers are used to receive orders
from television and print ads, direct mail, or catalogs.
4. Properly designed and targeted telemarketing provides
many benefits, including purchasing convenience and
increased product and service information.
5. However, the explosion in unsolicited telephone marketing
has annoyed many consumers. Lawmakers around the
country have responded with legislation ranging from
banning unsolicited telemarketing calls during certain hours
to letting households sign up for “Do Not Call” lists. Most
telemarketers are recognizing such negative reactions and
support some action against random and poorly targeted
telemarketing.
ii. Direct-mail marketing involves sending an offer, announcement,
reminder, or other item to a person at a particular address.
1. Using highly selective mailing lists, direct marketers send
out millions of mail pieces each year.
2. Direct mail accounts for nearly 24 percent of all directmarketing media expenditures and more than 32 percent of
direct-marketing sales.
3. Direct mail is well suited to direct, one-to-one communication. It permits high target-market selectivity, can be
personalized, is flexible, and allows easy measurement of
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results. Although the cost per thousand people reached is
higher than with mass media such as television or
magazines, the people who are reached are much better
prospects.
4. The direct-mail industry constantly seeks new methods and
approaches. For example, CDs are now among the fastestgrowing direct-mail media.
5. Until recently, all mail was paper based and handled by the
U.S. Post Office or delivery services. Recently, however,
three new forms of mail delivery have become popular.
a. Fax mail: Marketers now routinely send fax mail
announcing special offers, sales, and other events to
prospects and customers with fax machines.
b. E-mail: Many marketers now send sales announcements, offer, product information, and other
messages to e-mail addresses.
c. Voice mail: Some marketers have set up automated
programs that exclusively target voice mailboxes
and answering machines with prerecorded messages.
6. These new forms deliver direct mail at incredible speed
compared to the post office’s “snail mail” pace. Yet, much
like mail delivered through traditional channels, they may
be resented as “junk mail” if sent to people who have no
interest in them.
iii. Advances in technology, along with the move toward personalized,
one-to-one marketing, have resulted in exciting changes in catalog
marketing.
1. With the stampede to the Internet, more and more catalogs
are going electronic. Most print catalogers have added
Web-based catalogs to their marketing mixes, and a variety
of new Web-only catalogers have emerged.
2. Ninety-seven percent of all catalog companies now present
merchandise and take orders over the Internet. Web-based
catalogs present a number of benefits over printed catalogs.
a. They save on production, printing, and mailing
costs.
b. Whereas print-catalog space is limited, online
catalogs can offer an almost unlimited amount of
merchandise.
c. Web catalogs also allow real-time merchandising:
Products and features can be added or removed as
needed, and prices can be adjusted instantly to
match demand.
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d. Finally, online catalogs can be spiced up with
interactive entertainment and promotion features,
such as games, contests, and daily specials.
3. Web-based catalogs also present challenges.
a. Whereas a print catalog is intrusive and creates its
own attention, Web catalogs are passive and must
be marketed.
b. Attracting new customers is much more difficult for
a Web catalog than for a print catalog.
c. Thus, even catalogers who are sold on the Web are
not likely to abandon their print catalogs.
iv. Direct-response television marketing takes one of two major forms.
1. The first is direct-response advertising. Direct marketers air
television spots, often 60 or 120 seconds long, that
persuasively describe a product and give customers a tollfree number for ordering.
2. Television viewers often encounter 30-minute advertising
programs, or infomercials, for a single product.
3. Some successful direct-response ads run for years and
become classics.
4. Many companies have begun using infomercials to sell
their wares over the phone, refer customers to retailers,
send out coupons and product information, or attract buyers
to their Web sites.
5. Direct response TV commercials are usually cheaper to
make and the media purchase is less costly. Moreover,
results are easily measured. Unlike most media campaigns,
direct-response ads always include a 1-800 number or Web
address, making it easier for marketers to measure the
impact of their pitches.
6. Home shopping channels, another form of direct-response
television marketing, are television programs or entire
channels dedicated to selling goods and services. With
widespread distribution on cable and satellite television, the
top three shopping networks combined now reach 248
million homes worldwide, selling more than $4 billion of
goods each year.
v. Some companies place information and ordering machines—called
kiosks (in contrast to vending machines that dispense actual
products)—in stores, airports, and other locations.
1. Business marketers also use kiosks.
2. As with about everything else these days, kiosks are also
going online, as many companies merge the powers of the
real and virtual worlds.
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Integrated Direct Marketing
m. Too often, a company’s individual direct-marketing efforts are not well
integrated with one another or with other elements of its marketing and
promotion mixes.
n. A more powerful approach is integrated direct marketing, which involves
using carefully coordinated multiple-media, multiple-stage campaigns.
i. Such campaigns can greatly improve response.
1. Whereas a direct-mail piece alone might generate a 2
percent response, adding a Web site and toll-free phone
number might raise the response rate by 50 percent.
2. Then, a well-designed outbound telemarketing effort might
lift response by an additional 500 percent.
3. Suddenly, a 2 percent response has grown to 15 percent or
more by adding interactive marketing channels to a regular
mailing.
ii. More elaborate integrated direct marketing campaigns can be used.
Consider the multimedia, multistage campaign shown in Figure
16.5.
Public Policy and Ethical Issues in Direct Marketing
o. Direct marketers and their customers usually enjoy mutually rewarding
relationships. Occasionally, however, a darker side emerges.
i. Direct marketing excesses sometimes annoy or offend consumers.
1. Most of us dislike direct-response TV commercials that are
too loud, too long, and too insistent.
2. Beyond irritating consumers, some direct marketers have
been accused of taking unfair advantage of impulsive or
less sophisticated buyers.
3. Other direct marketers pretend to be conducting research
surveys when they are actually asking leading questions to
screen or persuade consumers.
ii. Invasion of privacy is perhaps the toughest public policy issue now
confronting the direct-marketing industry.
1. These days, it seems that almost every time consumers
enter a sweepstakes, apply for a credit card, take out a
magazine subscription, or order products by mail,
telephone, or the Internet, their names are entered into
some company’s already bulging database. Using
sophisticated computer technologies, direct marketers can
use these databases to “microtarget” their selling efforts.
2. Consumers often benefit from such database marketing—
they receive more offers that are closely matched to their
interests. However, many critics worry that marketers may
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know too much about consumers’ lives and that they may
use this knowledge to take unfair advantage of consumers.
At some point, they claim, the extensive use of databases
intrudes on consumer privacy.
p. The direct marketing industry is addressing issues of ethics and public
policy.
i. For example, in an effort to build consumer confidence in
shopping direct, the Direct Marketing Association (DMA)—the
largest association for businesses practicing direct, database, and
interactive marketing, with more than 4,700 member companies—
launched a “Privacy Promise to American Consumers.”
1. The Privacy Promise requires that all DMA members
adhere to a carefully developed set of consumer privacy
rules.
2. Members must agree to notify customers when any
personal information is rented, sold, or exchanged with
others.
3. They must also honor consumer requests to “opt out” of
receiving further solicitations or having their contact
information transferred to other marketers.
4. Finally, they must abide by the DMA’s Preference Service
by removing the names of consumers who wish not to
receive mail, telephone or e-mail offers.
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