Igor Skender and Dr. Kristen B. DeTienne, Organizational Leadership and Strategy
Direct marketing, as a profit making tool, was introduced in the United States and Europe just a few decades ago. It became widely spread in our society with its presence especially accentuated in the advertising field. This type of marketing has forever revolutionized the way consumers shop as well as the business world as a whole.
Several successful entrepreneurs published courses on direct marketing, so I decided to use some of the scholarship funds to purchase a couple of them (Brad Richdale’s course, and Dan Lapre’s course.) My research findings primarily derived from these sources. I found approaching the research from that prospective very useful because these direct marketers had a hands-on attitude about what ingredients are necessary to launch a successful direct marketing campaign.
First of all, the authors identified products and services that work: those have to solve a common problem, do it fast and easy. Then, they discussed the importance of market segmentation. Without a target market direct marketing is very inefficient, and it doesn’t serve its purpose. Through further research of what makes direct marketing so successful, I started to realize the huge impact of direct response advertising. Seeking a direct response is a primary and consistent goal of direct marketers (1).
In the advertising process, direct marketers use several principles to maximize this response rate. These principles include: emphasizing benefits (of your product or service) over features, writing attention grabbing headlines, using the AIDA (attention-interest-desire-action) formula when composing your advertisement, and last but not least constant research and testing of your headlines and advertisements as a whole.
Essentially in direct marketing there are two types of offers: a soft offer and a hard offer. A hard offer consists of an advertisement that tells a prospect to call, the price of the product or service and what to do to order. This is a one step process with no secondary mechanisms. This offer is often used for relatively cheap products or services (less than $29.95).1 A soft, or two-step offer consists of an ad that motivates people to call to find out more about the product or service. When the interested person calls they get a live operator or an answering machine explaining the details of the offer. This second mechanism is used to convert the prospects into customers (1).
Recently, the evolution of the Internet has had a big impact on direct marketing. Entrepreneurs started selling information (among other products and services) in the net. This resulted in no printing costs, and no shipping and handling costs. Also, the efficiency of advertising on the net is high, because the cost of reaching thousands and thousands of readers is relatively low. Another technological advance that aided direct marketers are databases. Businesses are using them for easy updates, accurate and fast accessibility of information, strategic management, and a variety of other uses.
Through constant research and testing, direct marketers are more educated on the market, targeting only the most interested consumers. At that point, implementing direct response advertising proves to be extremely cost effective which results in an edge over the competition using traditional marketing methods. Therefore, having low advertising and selling costs translates into bigger profit margins.
This explains two recent phenomena: the incredible growth of the direct marketing industry and the rate at which direct marketers are becoming wealthy. This is how: these profits can be reinvested into the business, making it grow at a greater rate, as seen in Figure 1, or it can be distributed to the owners (cashed in).
My predictions are that the study of direct marketing will continue, and its use in business will grow rapidly. “As more and more companies and agencies accept the disciplines of the direct marketing method–target, test, learn, and improve–its use will continue to grow. Naturally, more and more good people with various direct marketing skills will be required” (2).
References
- Richdale, B. (1995). Think Like a Millionaire. Daytona Beach, FL: Health Tec.
- Reitman, J. I. (1994). Beyond 2000 the Future of Direct Marketing. Lincolnwood, IL: NTC Business Books.
Figure 1
The growth potential of a company using direct marketing (red) as compared to traditional marketing (green.)
