The Principles & Practice of Direct

Marketing

Chapter 1
Defining Direct Marketing & the
Importance of Direct Marketing

Direct marketing is a system of

marketing by which organizations directly
communicate with the target customer/s
to generate a response or transaction.
This response may take the form of an
inquiry, a purchase or even a vote.

Direct Marketing is the total of activities

by which the seller in effecting the
exchange of goods and/or services with
the buyer, directs efforts to target
audience using one or more media (direct
selling, direct mail, telemarketing, directaction advertising, catalogue selling, cable
TV selling, mobile marketing etc) for the
purpose of soliciting a response by phone,
mail or personal visit from a prospect
orcustomer.
- Peter Bennet


Direct Marketing involves all activities
of marketing: Marketing Research,
Segmentation, Target Marketing, and
Evaluation.

Direct Marketing is an interactive

system of marketing which uses one or
more media to effect the measurable
response or transaction at any level.

D.M. is used for Niche products,

Service Products or Programs.

Traditionally Direct Marketing was

performed using Catalogues, Direct mail,
Telemarketing.

Strategies of D.M. - uses a

number of media and each medium
performs specific functions. Generally,
they follow

One-Step Method the medium is used

directly to obtain an order. Goal is to
generate immediate sale.

Two-Step Method- can involve the use of

more than one medium. The first effort- to
screen or qualify potential buyers. The
second effort generates the response.
Telemarketing + Direct Mail.

Basic Reasons for the Growth

of Direct Marketing

Changing Market Place:

Growth of delivery systems and media

fragmentation.
Affordable computing power & growth of
databases (databases used for future
purpose of marketing).

Changing Role of Direct

Marketing & Business focus:
Building & maintaining customer
relationship
To maximize sales

 To maximize customer loyalty

Changing Cost Structures:

It is getting to be more expensive to use

mass-media.
Advertising is done thro line extensionssince advt. is above- the- line expenditure.
Increasing clutter in media.

Technological development:
(Advances & Innovations)
Changes in the market place- B2B sellingit has increased or has seen tremendous
growth.
The change place of market- e.g. home,
office etc.
Alternative distribution channels.

Changing lifestyles and

demographics.

Evolving economy and

international competition.

 Direct marketing is an
interactive system of marketing
which uses one or more
advertising media to effect a
measurable response and/or
transaction at any location.

three key elements

(Direct Marketing) of this definition.
There are

They are as follows:

First, direct marketing is interactive

in that marketer and prospective customer
engage in two-way communication. The

response or non-response of the customer

completes the communication loop in the
direct marketing process. E.g. filling in the
response coupon by the customer and
mailing it. That is, direct marketing
activities give the target market of the
communication an opportunity to respond.

Second, all direct marketing activities

are significantly more measurable than
traditional general advertising and sales
promotion. A response or the lack of it can
be associated with each direct mail piece,
each catalog mailing, or each direct
response television advertisement. Direct
marketers use direct marketing databases
of stored purchase behavior and other
information about individuals &
households to analyze customer
characteristics and plan new campaigns.
These databases are the foundation of
effective direct marketing.

Third, direct marketing activities can

take place from any location. Marketer

can interact with the customer over

phone, through mail, Internet, by fax.

WHY DIRECT MARKETING?

The environment has become more
complex.
Bargaining power of the consumer has
increased.
Market has become more competitive.
Cost of marketing a product has increased.
The retail shelf cost at outlets in major
cities is costly.
Advertising budgets are high.
Less customer loyalty.
DM helps companies focus on their
marketing efforts.
Consumer lifestyle has changed. Today,
customers look out for convenience in
shopping. Tele-shopping, home shopping,

catalog marketing and online marketing

cater to core customer value.
Globalization has facilitated the growth of
direct marketing.
Niche markets with distinct preferencesDM
Technology has changed and enhanced
the DM activity.

Competencies of Direct
Marketing


Direct marketers seeks to persuade
people to buy products or services, like
other forms of promotion. Virtually, all of
direct marketings special competencies
derive from the fact that the
communications are directed at specific
individuals and not at mass markets via
mass media. This includes the
combination of advertising and selling into
a single function, the prominence of
customer service, the ability to precisely
target individuals, and the ability to create
personalized messages that call for
immediate action. Finally, the results of
direct marketing campaigns can be
monitored and measured.
Combinations of Advertising &
Selling: Direct marketers use paid
messages in mass media to elicit a
response from their prospective customer.
In the process, the communication
performs both an advertising and selling
function without an intermediary. This

makes it cost effective because it reduces

intermediary mark ups to increase profits.
Customer Service: Customer service
plays an important role in direct
marketing. For most firms, customer
loyalty is an important issue because
companies make money from repetitive
pattern of purchases rather than from just
one sale. Customer service is important
and encourages regular interactions
between the direct marketer and the
customer. A popular idea- Relationship
Marketing.
Precision targeting: Direct marketing
communications are frequently aimed at
individuals. This is particularly true of
direct-mail and telemarketing campaigns
based on the use of segmented lists that
come from information contained in
databases. Targeted marketing reduces
the waste that occurs in other forms of
communications.

Call for Immediate action: Direct

marketing offers calls for specific and
immediate action. The prospect is
encouraged to place an order or request
more information by calling a number or
sending in a card.
Personalization: In direct marketing
communications, individual consumers are
addressed by name. while business
prospects should be addressed by name &
title. Information from a database is used
to produce a specific appeal based on
consumers personal characteristics
and/or past purchase behavior.
Measurement: Direct marketing
activities have an advantage since it
facilitates performance tracking.
Campaigns can be monitored to determine
its success and precisely identifying what
worked and what did not. This helps in the
efficient allocation of marketing resources.
Tracking performance allows direct
marketers to analyze relationships

between customer characteristics & buyer

behavior in their database.
Invisible strategies: Direct marketers
have the advantage to conceal their
strategies from their competitors or make
it less visible since they are on a one-toone communication with their customers.

Mass Marketing Vs One-to- One

Marketing
MASS MARKETING
ONE MARKETING

Average customer
Individual customer

Customer anonymity
Customer profile

Standard product
Customized market offerings

ONE TO


Mass production
Customized production

Mass distribution
Individualized distribution

Mass advertising
Individualized messages

Mass promotion
Individualized incentives

One way communication

communication

Two way

Economies of scale
Economies of scope

Share of market
customers

Share of

All customers
customers

Profitable

Customer attraction
retention

Customer

Benefits of Direct marketing

Home shopping- hassle free & fun,

convenient.

Saves time.

Introduces a customer to a large

variety of products at a time.

Comparative shopping is possible by

browsing through mail order catalogues &
online shopping.

Can order goods for ourselves & others

also.

Sellers also benefit, they can

personalize, customize messages.

Direct marketers can build a continuous

relationship with each customer. E.g.
Parents of newborn babies may receive
periodic mailings on clothes, toys etc as
the child grows. Nestle baby division
builds a database continuously of new
mothers and sends personalized packages

of gifts and advice at the key stages in the

babys life.
Direct marketing strategies can be timed to
reach prospects at the right time and
moments. Thus, DM receives a higher
readership because it is sent to more
interested prospects.
Direct marketing strategies & offer benefit
the marketer
since it is less visible to the competitors.
Direct marketing helps in building effective
long-term relationships with the customers
and this helps in getting customers to stay
loyal.
The measurable response to direct marketing
campaigns help to decide the more profitable
ones.

Decision Variables in Direct

Marketing
For Direct Marketing, the following
variables are associated with making
program decisions:
1. Offer 2. Creative 3. Media 4.
Timing/sequencing
5. Customer service
Offer: The Offer is the complete
proposition made to a prospective
customer by the firm selling the good or
service. It includes the product or service,
the positioning of the product or service in
terms of needs or benefits, the price of the
offering, any risk-reduction mechanisms
such as money-back guarantee, or price
refund or discounts available to the buyer.

Creative: The creative component

includes the copy platform, graphic design
elements, involvement techniques, and
production considerations such as
personalization.
Media: The media used by direct
marketers include all those used by
general marketers as well as direct mail,
telephone, and online services. Directresponse print & TV advertising are
particularly effective in generating
responses to complex offers that contain
items that can be displayed visually.
Timing/Sequencing: Timing &
Sequencing of direct marketing
communications determine whether the
product or service is offered once or as a
part of a campaign, that is, as one-shot
message or as multiple messages. Also at
issue is whether a campaign should be on
intermittently (pulsing) or continuously, as
well as how often should the
communication be repeated.

Customer Service: Customer service is

an important aspect of DM. It leads to
strong customer franchise and loyalty.
Satisfaction with service is a prime
consideration in customers repurchase
decisions. In fact, many direct marketers
consider expenditures on customer
service and loyalty as an investment. The
types of customer service that build
businesses include speedy and accurate
order fulfillment; prompt and satisfactory
handling of customer inquiries and
complaints; and a guaranteed return
policy (such as- if damaged/defective,
email us at or write to us at----- or to
provide you a worry free shopping
experience, we offer you a No Questions
Asked Return Policy, within 7 days..).
Other important elements of customer
service are toll-free telephone numbers,
money-back guarantees, and the
acceptance of credit cards.

Limitations of Direct Marketing

Acquisition of data of individual

customers may be difficult Direct
marketing is effective only when all
information about the individual
customer is available. It may be
difficult to acquire this data, as people
would be reluctant to part with
personal information.

The customers could be exposed

to information overload In todays
rich business and personal
environment everyone is bombarded
with all types of data. Daily people
receive letters, voice mails, catalogues
etc. Welcome and unwelcome
information accosts the senses through
the radio, television, telephone, books
etc. Direct marketers are perceived to
be contributing to this overload.


Requires highly skilled staff to
analyze each customer profile In
Direct marketing communications,
individual customers should be
addressed by name & title. Also
information from database is used to
produce specific appeal based on
consumers personal characters &/or
past purchase behavior. It is therefore
important that the profile of each
individual customer is accurately
maintained. This would be possible
only if the staff employed is highly
competent to carry out this accurately.

Customer Service rather than

customer loyalty is more important in
direct marketing

Direct Marketing Advantages

Selective Reach- DM reaches a large
number of people, reduces waste
coverage, and targets consumers with the
highest potential.
Segmentation Capabilities- Direct
marketers maintain lists of recent product
purchasers, car buyers, property buyers,
bank-card holders, credit-card holders,
cellular service users and so on.
Segmentation is done through these lists
on the basis of geographic area,
occupation, demographics,
psychographics. Marketers develop
effective segmentation strategies.
Frequency- Direct marketers build
frequency levels through the medium
/media used. Direct-response TV
advertising is quite inexpensive. The
frequency through direct mail is not easily
accomplished.

 Flexibility- Direct marketing uses a

variety of creative forms. A direct mail
provides detailed information; directresponse TV advertising combines sound,
sight and motion and allows product
demonstration and so on.
Timing- DM, unlike other media can be
much more timely. For e.g. a direct mail
can be put together very quickly and
distributed to the target population.
Personalization- Direct marketers can
personalize the messages & offers most
effectively.
Costs- the CPM for direct mail is high but
its ability to specifically target the
audience eliminates any waste coverage
and hence reduces the actual CPM. Cost
per consumer purchase contributes to
cost-effectiveness of direct-response
advertising. The cost of media is low, and
each sale generated is inexpensive.

 Measures the Effectiveness- Direct

marketing program measures the
effectiveness of the activity effectively.
The feedback generated is immediate and
accurate. This helps in the measurement
of the DM activity.

Direct Marketing
Disadvantages
Image Factors- Direct marketing suffers
from poor image factors. Direct mail is
often treated as junk mail. Direct-response
ads on TV are often low-budget ads for
low-priced products. This contributes to
the image that something less than the
best products are marketed although
home shopping channels do promote
some expensive products. Telemarketing
and spam are irritating to many
consumers thus lowering the image of the
direct marketing industry.
Accuracy- One of the advantages of DM is
targeting specific, potential customers.

But, the effectiveness depends on the

accuracy of the lists used which is very
often inaccurate. Lists must be continually
updated. Selectivity decreases if lists are
not kept current.
Computerization has improved the currency
of lists, yet the ability to generate lists
remains a problem.
Content Support- Direct-response
advertising requires the creation of mood
but it is limited to the surrounding
program and/or editorial content. Direct
mail, online services also unlikely to create
a desirable mood.
Rising Costs-The Rising costs of direct
marketing program serves as a
disadvantage to the marketer.

For successful implementation of direct

marketing program, a company needs to
take a number of decisions. It is important
to determine:

What the programs objective will be

Which markets to target through the use
of a list or a marketing database
What direct marketing strategies will be
employed
How must the effectiveness of the
program be evaluated
To determine the effectiveness of
database, the database must be
frequently updated.
RFM Scoring method must be employed to
databases.
RFM- Recency, Frequency, Monetary
transactions between the company and
the customer.
It is important to enter the data each time a
transaction is made. The company can keep a
track of :
How recently purchases have been made
How often are they made

What amounts of money are spent

Tracking which products/services are used
increases the ability to track the customer
population & develop effective marketing
strategies.

Objectives of Direct Marketing

Sale of products/Services

Lead Generation- People who respond

to DM or are interested.

Lead Qualification- A prospect

Establishing & Maintaining Customer

Relations.
SUSPECTS
PROSPECTS
CUSTOMERS
CLIENTS
ADVOCATES
Direct Marketing- Direct contact with
customers through emails, telephone, direct
mail or direct response using mass media
such as TV, Internet.

 Direct Mail- Fax mail. Email, Voice mail,

Solo mails, Product catalogue/ brochures.
Direct-response TV & Radio- direct
response; Infomercials, Space advertisingprint, Specialty advertising in print;
Binding cards ( Response cardsmagazines), Specialty advertising in
various media- coupons, samples etc.

Principles of Direct Marketing

There are eight key principles of direct

marketing& they are as follows:
Planning your marketing activity: All direct
marketing should form part of a controlled
marketing strategy, which has been
produced as a result of market and
competitor analysis and in relation to
achievable objectives.
Targeting your customer: Customer
information should be stored and capable
of manipulation and retrieval from your

customer database, to contact your

existing customers. Analysis of this also
helps you to identify characteristics of
potential future customers.
Measuring your marketing activity: The
results of direct marketing should be
measured to tell you what works and
what doesn't.
Tracking: This involves monitoring
customers' responses over time, ideally
for as long as your relationship with them
lasts. This enables you to measure their
value and understand how much of it is a
result of how you marketed to them.
Customer behavior: Tracking the spending
patterns and general behavior of your
customer can help you establish which
products are popular and which aren't.
This can help you determine future
products and strategy.
Future strategies: One aim of marketing is
to maximize the value of your customers.

So the previous steps will ensure you have

the information to plan effective and
efficient marketing to achieve this aim.
Developing long-term loyalty: By targeting
the right customers, offering them what
they want and encouraging them to take
more of your products, you will protect
your customer database. Your customers
will be more likely to stay with you for
longer.
Encouraging profitable business growth:
Increasing the number of loyal and
valuable customers you have and limiting
the number of customers with low value
and/or high risk to achieve the profitable
growth of business. This increases
turnover and profit, which can be
reinvested to ensure that service and
product standards are maintained and
ensure that your customers stay happy.

Elements of Direct Marketing

Program
Establish your market objective:
Estimate the size of the market. There are
two ways of doing it- (i) increased
conception of existing users
(ii) increased conception of the
market.
Evaluate the market place:
(i) Business environment (ii) Competitive
analysis- who are they? Entry barrier. (iii)
Customer-market segments- SEC,
demographics, psychographics, identifying
TG. (iv) Product-use behavior- heavy &
medium user. (v) Product & market phase
(vi)Evaluating past performance- % response
rate, sales, no. of requests for information, no.
of qualified leads, new customers acquired,
lapsed customers, customer acquisition cost
(ratio of marketing cost &

customer acquired), Customer lifetime value

evaluation.
Developing a Communication Strategy:
Identifying TG
Positioning of the brand
Key selling proposition (USP)

Types of Direct Marketing

Direct marketing can be applied to all

three key business sectors:
Business to consumers
Business to intermediaries
Business to business

Approaches to Direct Marketing

Stand-Alone Direct Marketing
This could be regarded as the ultimate"
Direct marketing approach. Organizations that
employ this type of approach employ no other

means to manage the relationship with their

customers. Companies such as First Direct,
Direct Life insurance or Bazee.com fall under
this category. Here the customers are directly
recruited via direct response press
advertising, direct mail or the internet.
Thereafter, the relationship is managed using
a combination of telephone, mail, e-mail etc.
Integrated Direct Marketing
In this approach Direct Marketing is viewed
as a part of an integrated marketing mix.
Organizations such as 'Save the child',
'Readers Digest', Pizza-Hut are seen to adopt
this approach.
Peripheral Direct Marketing
In this type of approach, Direct Marketing is
employed as only an occasional, tactical
marketing tool. Here direct marketing could
be initiated as a short-term response to
decreasing sales or competitive pressures.
Hindustan Lever and many other FMCG
companies adopt this form.

IMC Model
Review of Marketing Plan- Objectives, role
of advertising & promotions, Competitive
analysis, assess environmental influences.
Analysis of Promotional Program SituationInternal AnalysisExternal Analysis
Promotional dept. orgzn.
behavior

Consumer

analysis
Firms ability to implement
segmentation &

Market

promotional program
marketing

target

Agency evaluation &

positioning

Market

selection
Review of previous programResults

 Analysis of Communication

Process:
Analyze receivers response process
Analyze source, message, channel factors
Establish communication goals &
objectives
Budget Determination
Develop IMC Program- Set objectives,
determine budget, develop medium/media
Integrate & Implement Marketing
Communication
Monitor, Evaluate & Control IMC Program

The Role of Direct Marketing in the IMC

Program

Advertising & Marketing

IMC considers all sources of brand or

company contact that a customer/prospect
has with a product/service. It is a way to
coordinate and manage the marketing

communications program to ensure that they

give customers a consistent message about
the company and/or its brands.
Consumers perceptions- a synthesis of the
bundle of messages they receive- media
advertisements, price, package design, direct
marketing efforts, publicity, sales promotion,
websites, POP displays & the store itself.
IMC is a centralized messaging function.

The Promotional Mix consists of :

Advertising
Direct Marketing
Internet Marketing/ Interactive Marketing
Sales Promotion
Publicity/ Public Relations
Personal Selling
Combining Direct marketing with
Advertising:

Direct Marketing is a form of advertising

through mail, print or TV- Direct response ad.
Combining Direct Marketing with
Internet/Interactive:
Direct marketing makes use of online
promotions through websites, interactive
CDs/DVDs/kiosks to
seek a response or complete a sale. Online
catalogues promote the product/service to
elicit a response.
Combining Direct Marketing with
Public Relations/ Publicity:
Public relations activities and Publicity
oriented activities employ direct marketing &
direct response techniques.
Combining Direct Marketing with
Personal Selling:
Telemarketing & direct selling is an aspect
of Personal selling. In multi-stage selling,
direct mailers are used to invite prospects or

after direct selling efforts, direct mailers are

sent as a follow-up & reminder.
Combining Direct Marketing with
Sales Promotion:
Direct mailers inform a prospect of sales
promotion events/activities or invites a
prospect by way of contests & prizes & gifts
as incentives. In sales promotion
implementation, direct marketing tools are
employed to inform customers.

Lifetime Value in DM
Lifetime value (LTV) is a calculation of the
value of a customer to you over the projected
life of that customer (the time he/she spends
with you). For example, a credit card
customer who maintained a Rs.500
outstanding balance on his/her credit card
may with fee & interest payments, generate
Rs.75/- or more for the credit card issuer each
year. If the credit card customer kept the card
active for 8 years, then the LTV of the

customer to the issuer is Rs.75/- times eight

or Rs.600/-.
Lifetime value of a new customer is
defined as the net present value of all
future contributions to overhead &
profit.
The four most important factors contributing
to a customers lifetime value are:

Future Forecast Revenue

Expenses
Profits
Cost of Capital

When planning your marketing plan, it is

important to consider how much revenue you
can get from a customer over the life of that
customer. Because that helps to determine
how much you can afford to acquire him/her.
This is the qualifying process.
The most important use of this concept of LTV
is in the areas of Customer Reactivation &
Customer Acquisition. How much is it worth
to get an additional customer? A rule of the

thumb is that a firm should invest no more

than 40% of LTV in customer acquisition.
In Direct Marketing, repeat customers are a
foundation of a firms business. Therefore, in
D.M. repeat business is usually a major
consideration & the primary source of
profitability of a firm. The more the customer
can spend with you over their lifetime, the
more valuable they are to you and the more
you can afford to spend to generate them.
Also knowing, whether you will be selling
additional products or services to those
customers should have an impact on how to
approach them for the initial sale. Here are
some ways a good salesperson determines
what the LTV of a customer might be:
Can I sell this customer my
product/service several times?
Can I upsell this customer to a more
expensive product once he/she buys the
first one?
Can I sell the customers additional (addon) products/services?

 Does my product/service generate onetime revenue or an on-going revenue

stream?
Will this sale to this customer lead to
additional sale to other customers?
LTV is therefore a measure of the total worth
to an organization of its relationship with a
particular customer. If this analysis is
conducted right across the database a key
advantage accrues. Organizations can employ
an LTV analysis to increase their overall
profitability by getting rid of customers who
will never be profitable and concentrating
resources on recruiting and retaining those
that will be profitable to the organization.

Advantages and disadvantages of

in-house versus bureau database
management.
Management

Advantages

Disadvantages

In-House

o A customized
approach is possible
o Day-to-day control
o Data can be moved
easily

Bureau

o Easier to enforce
service-level
agreements
o Share costs of
hardware
o Experience

o High
cost
of
development
o Lack of internal
expertise
o Name and address
handling is difficult
o Conflicting
demands from other
clients
o On-line
access
sometimes difficult
o High operating costs

Personal Selling vs. Group selling

1. Face-To-Face Selling (Personal selling)
The original and oldest form of direct
marketing is the field sales call e.g. Eureka
Forbes, Real Value - Ceasefire. Today most
industrial companies rely heavily on a
professional sales force to locate prospects,
develop them into customers, and grow the
business; or they hire manufacturers'
representatives and agents to carry out the

direct-selling task addition, many consumer

companies use a direct-selling force:
insurance
agents,
stockbrokers,
and
distributors
working
for
direct-sales
organizations such as, Oriflame, Avon etc.
2. Group Selling
A. Exhibitions and Trade Shows
Exhibitions are a hybrid medium. Some
exhibitions are like broadcast media
advertising. The aim is merely to put
products on show to a large number of
customers and excite their interest. Many
national consumer exhibitions are of this
kind. There may be a direct marketing
component. You can ask consumers showing
interest to give their name and address to
stand staff. These can then be distributed to
local dealers for follow-up, or customers
may receive a mail-shot to sustain their
interest and trigger a visit to an outlet
where they can buy.
Increasingly, especially in business to
business, exhibitions are used as an integral
part of the contact strategy. Prospective or
existing customers are targeted through
your database or rented lists. They are

invited to the exhibition and perhaps asked

to confirm their attendance. An appointment
with stand staff may even be booked. After
the exhibition, depending on the success of
the visit, there may be a follow-up contact
(sales force, telephone or mail). You should
use exhibitions when:
Sales calls are expensive and you want to
get many customers visiting you rather
than you visiting them;
You want to attract new customers and the
exhibition has proven quality attendance.
In this respect, the exhibition functions like
a rented list;
Complex concepts are being demonstrated,
so instead of individual demonstrations
having to be mounted all over the country,
many
customers
can
see
the
demonstration in one location.
e.g. Opel, Honda, Tata, Consumer Durables

B. Sales seminars and other companysponsored special events

These include the following:
o the straightforward sales seminar, where a
concept is described and perhaps audio-

visual techniques are used to demonstrate

it in action;
o the physical demonstration of the product,
often held in your sales office or at the
factory;
o awareness and training events, where
your aim is to educate customers so that
they can appreciate the value of your
company offering. This is the 'soft sell'
approach;
o entertainment, e.g. visits to sporting and
cultural events. Here your aim is to reward
your customer for loyalty and to further
cement the relationship.
All these have much in common with
exhibitions from a direct marketing view
point. The difference is that, being
sponsored by you, all those attending must
be invited by you or your business partners
(very common in business-to-business
marketing). To ensure the right quality of
attendee, direct marketing is the medium
most commonly used to market such
events. E.g. British Airways, Timeshare
Club selling.

DEFINITIONS IN DIRECT
MARKETING
1.
Database: An aggregation of data on
a computer organized into a specific
usable format. It also refers to a specific
table structure on a computer.
2.
Database Marketing: The process of
using data to help in your marketing
decisions and activities.
3.
Operational database: This
database is concerned with the
management of service transactions
containing data such as order, shipping,
and accounting records. It is likely to be
widely accessed by individuals throughout
the firm and is particularly essential to the
management of the fulfillment and billing
functions, since if often provides real-time
information in respect of the state of
customer's order and account. The
operational database usually contains
details of all the transactions a customer
might have with an organization

independent of specific product

categories.
4.
Data Mining: The process of looking
carefully at existing data to discover
marketing opportunities.
5.
De-duplication: De-duplication is the
act of ensuring that the database does not
contain duplicate records of the same
customer. A special de-duplication
program has to be run by the computer to
ensure duplicate customer records are
kept to a minimum.
6.
Merge-purge: Merge-purge is
merging two files, perhaps two external or
one external and your own internal
database into one. Extracting all additional
information of a single customer is merge
and eliminating all common information is
purge to hold one single record of that
customer. You therefore want to make sure
you do not have the same customer twice
in the final file.
7.
Verification: Verification is to ensure
that the data has been accurately entered

in the database. This is the standard

procedure.
8.
Validation: Validation is checking the
accuracy of personal and product data
provided by the customer.
9.
Data Warehouse: A data warehouse
is an amalgam of the master customers
file, marketing database, operational
database, customers database. It is built
for the purpose of analysis or as a central
resource that other applications might
share. It could be a batch warehouse (i.e.
constructed for a specific purpose) or an
on-line warehouse designed to provide
support for a range of on line-activities.
10. Inserts: A separately printed
marketing piece that is inserted into an
existing delivery vehicle like in another
publication, usually a newspaper, for
delivery.
11. Cross-selling: Cross selling is the
process of selling related, peripheral items
to a customer. The strategy of pushing
new products to current customers based

on their past purchases. Cross-selling is

designed to widen the customer's reliance
on the company and decrease the
likelihood of the customer switching to a
competitor. While selling a product to the
customer, you can check out their
preferences and come up with suitable
products to cross- sell to your customers.
This helps in the retention of the
customer.
12. Up-selling: Up-selling is a direct
marketing practice wherein a salesman
tries to tempt a customer into upgrading
their purchases or buying add-ons
amounting to greater cost and quality. It
provides customers with options that they
might otherwise not have considered. The
salesman simply ups the price of the
product by offering better products or
services.
Up-selling need not be manipulative.
Rather, it should simply be suggestive.
Since the customer is already buying a
product, he or she is generally "handled

with care" by the salesman who tries to

super-size the purchase. "Your choice of
jacket is excellent, madam. Incidentally,
we have the same jacket with fur for just
Rs.400 more."
13. Site Traffic Generation: No matter
how cool your site or how fabulous your
product is, you're not going to generate
enough sales to make your business viable
unless you can generate traffic. You have
to get the word out about your site and
give people a reason to visit it. The good
news is, there are lots of ways to
effectively advertise your site online and
drive much of qualified traffic to your site,
all for free! And by qualified, I mean
people who belong to your target market
and who are most likely to buy the
products or services you offer. These are
the people you want coming to your site.
Site generation also is created through
advertising i.e. by advertising about your
site to attract your target market.
14. SPAM: Unsolicited e-mail, often of a
commercial nature, sent indiscriminately to multiple
mailing lists, individuals, or newsgroups; junk e-mail.

E-mail that is not requested. Also known

as "unsolicited commercial e-mail" (UCE),
"unsolicited bulk e-mail" (UBE), "gray
mail" and just plain "junk mail," the term
is both a noun (the e-mail message) and a
verb (to send it). Spam is used to
advertise products or to broadcast some
political or social commentary. Like
viruses, spam has become a scourge on
the Internet as hundreds of millions of
unwanted messages are transmitted daily
to almost every e-mail recipient as well as
to newsgroups. Unfortunately for users
and fortunately for spammers, as an
advertising medium, spam does produce
results. Even if only an infinitesimal
number of users reply, it is still cost
effective since e-mail is a very inexpensive
way to reach people. As spam filtering
becomes more sophisticated, spammers
have to send even more spam to make the
same money, but e-mail lists can be
purchased for very little or hijacked, and
there is a thriving ancillary business
selling lists to spammers. There are even
third-party spam service providers that
will do all the work for you.

15. Lead Generation: Lead generation

involves a combination of targeted
communications delivered at one time
with the goal of generating a response.
Multimedia lead generation involves the
use of several lead-generating tools
simultaneously.
16. Lead Qualification: Lead
Qualification is designed to screen out bad
leads or non-serious prospects. Lead
Qualification is used to disqualify bad
leads or to grade leads according to some
criteria.
17. Response lists: Response lists are
names derived from a companys/
organizations files. It is a list of people
who are known to have responded to
previous similar marketing events,
including your own.
18. House lists: A list of a firms own
customers is called a house list.
19. Compiled lists: Compiled lists are
compilations derived from numerous
sources such as public information sources

such as telephone directories, voter lists,

automobile registrations, pan card, gas
ownership etc
20. RFM: It refers to three key factors that
determine the usage success of response
lists, namely, recency, frequency &
monetary. Recency refers to how long ago
the people on the list made their last
purchase through direct marketing
response media. The more recent the
purchase, the better. Frequency refers to
how often the prospect buys through
direct response media, such as mail or
phone etc. Monetary refers to how much
money the prospect on the list has spent
on the direct marketing purchase.
21. List owners: A list-owner is a mailorder or telemarketing firm, a broadcast
direct-response marketer, a magazine or
book publisher or other firm that makes its
customer list available to the commercial
list-rental marketplace.
22. List Managers: List managers
represent the list owners and are

considered experts who understand how

to get the most out of lists. They interact
with list brokers and keep track of all
aspects of the process relevant to the
owner. List managers are most likely to
recommend only the lists they manage.
23. List Brokers: List brokers rent lists to
firms for list owners. List brokers are list
experts. They know what lists are
available, how the lists tend to perform,
and how they can be best used. List
brokers act as consultants to direct
marketers, advising them on what
response lists are available and which
would most likely work for a particular
offer.
24. List Depth: Marketers using a list first
mail or telephone the names expected to
be most productive and then move down
the list until the incremental response rate
is equal to the break-even response rate.
This is what is called list depth in direct
marketing.

25. Response rate: This is the number of

responses that come from each piece of
mailing or each call made. This helps in
calculating the list depth.
26. Infomercial: A long format television
commercial, usually 30 minutes or longer
providing advertisers with a more
conversational way of communicating
detailed information, advice, and
discounts on products & services. They are
designed to elicit a direct order/inquiry
from a viewer.
27. Direct Response Print Media: It is a
major direct marketing medium. It
involves the placement of an
advertisement in a magazine, newspaper,
or some other similar printed medium.
28. DRTV: It is more than an ordinary
television commercial. It asks for an
immediate decision from individuals. It
aims to talk directly to a more specialized
target audience and contains a telephone
number to encourage viewers to place
orders or request for more information. It

is a good medium to encourage sales or

generate leads.
29. Stand-alone approach: This could be
regarded as the ultimate" Direct
marketing approach. Organizations that
employ this type of approach employ no
other means to manage the relationship
with their customers. Companies such as
First Direct, Direct Life insurance or
Bazee.com fall under this category. Here
the customers are directly recruited via
direct response press advertising, direct
mail or the internet. Thereafter, the
relationship is managed using a
combination of telephone, mail, e-mail etc.
30. Integrated approach: In this
approach Direct Marketing is viewed as a
part of an integrated marketing mix.
Organizations such as 'Save the child',
'Readers Digest', Pizza-Hut are seen to
adopt this approach.
31. Peripheral approach: In this type of
approach, Direct Marketing is employed as
only an occasional, tactical marketing tool.

Here direct marketing could be initiated as

a short-term response to decreasing sales
or competitive pressures. Hindustan Lever
and many other FMCG companies adopt
this form.
32. Internet: A large network of
interconnected computers. The Internet,
particularly the World Wide Web, is gaining
mass-market acceptance. The web-sites
are designed to entertain, to inform, and
to sell.
33. Viral marketing: Viral marketing
refers to marketing techniques that use
pre-existing social networks to produce
increases in brand awareness or to
achieve other marketing objectives
through self-replicating processes. Viral
marketing may take the form of video
clips, interactive Flash games,
advergames, e-books, brandable
software, images, or text messages.
34. SMS: SMS is the written text service,
which is sent from mobile to mobile and
also, though less widely used, from PC to

mobile and from digital TV set-top box to

mobile. This is often called 'message to
mobile'. As this channel is fairly new, it
has the benefit of increased cut-through
and impact on its audience who may still
be receiving marketing through SMS for
the first time. With SMS comes the
promise of personal and local marketing
that is both interactive and immediate.
However, because this is an incredibly
personal channel, care should be taken to
ensure the message is targeted to the
right person, at the right time, with the
right offer, or else the message can be lost
and damage done. Results have shown
that the more interaction you have with
the receiver, and the more value you add,
the better the response.
35. Direct marketing: Direct Marketing
is the total of activities by which the seller
in effecting the exchange of goods and/or
services with the buyer, directs efforts to
target audience using one or more media
(direct selling, direct mail, telemarketing,

direct-action advertising, catalogue

selling, cable TV selling, mobile marketing
etc) for the purpose of soliciting a
response by phone, mail or personal visit
from a prospect or customer.
36. Precision targeting: Direct
marketing communications are frequently
aimed at individuals. This is particularly
true of direct-mail and telemarketing
campaigns based on the use of
segmented lists that come from
information contained in databases.
Targeted marketing reduces the waste
that occurs in other forms of
communications.
37. Geo-demographic segmentation:
Geo-demographic segmentation is based
on experience showing that consumers
who live next to one another have similar
incomes, needs, and lifestyles. It describes
the demographics of households in
specific geographic areas by the Pin
code/Zip code.

38. Catalogs: A brochure containing

pictures/photographs, descriptions, and
prices of products and services for sale,
usually an array of merchandise with a
specialized focus, although some may
contain general merchandise. They are
extensively used for consumers &
businesses.
39. Telemarketing: Telemarketing is the
application of telephone to direct
marketing efforts. It may be Inbound or
Outbound. Inbound is when customers
call a firm to place an order or to request
for more information or customer service.
Outbound is when a firm calls customers
and prospects to make a sale or to offer
information which it hopes will lead to a
sale.
40. LTV: It is an estimate of the net
present value of all future contributions to
profit & overhead that a firm can expect
from a new customer. LTV is a strategic
planning tool used to support decisions
about customer acquisitions.

41. Prospect: A business or consumer

that, for one reason or another, you
believe will be responsive to marketing
about your product or service.
42. Seeds: Names and addresses added
to a mailing or other marketing list so that
marketers can track the deliverability of
their marketing event.
43. Response device: Any material, such
as a coupon or reply card, that is designed
to be completed by a prospect and
returned to a marketer to begin or
complete a sales interaction.
44. Relational database: A database
consisting of tables of information linked
together by a common data element, such
as a customer number or telephone
number.
45. Business reply envelope: A mailed
envelope for the sender, to use it to reply
to a marketing solicitation by sending
back a coupon, an order form, a cheque or
a message.

46. Acquisition cost: Measure of the

amount of money it takes to acquire a
customer, an order, or a lead.
47. Fulfillment: The process of sending
consumers a product or service they have
ordered.
48. Market Segmentation: The process
of sub-dividing a larger market of
customers or prospects into smaller units,
usually with similar characteristics, which
makes marketing to them easier.