Direct Marketing Essentials and Examples

In direct marketing, organizations communicate directly with target customers to generate a response and/or a transaction. Traditionally, direct marketing has not been considered an element of the promotional mix.

However, because it has become such an integral part of the IMC program of many organizations and often involves separate objectives, budgets, and strategies, we view direct marketing as a component of the promotional mix.

Direct marketing also involves:

1. Database marketing

2. Direct Selling

3. Telemarketing

4. Direct response ads through direct mail

5. Internet advertising

Amway is one of the global leaders in direct marketing. The name Amway is derived from the words "American Way " . Amway is often used as an example of a direct marketing company. The company sells its products using direct distributors called Amway Business Owners ( ABO). The model works on a business networking model .Amway is a 100 % direct marketing company . That means the consumers will not get any Amway products from shops. The products can be bought through ABO's. Hence the sales are driven by the efforts of ABOs. Since the company does not advertise its brands, the only communication channel is through ABOs who visits households and make presentations. There are two tasks of a typical ABO : the first task is to sell Amway products and second task is to appoint new ABOs .

Typically direct marketing firms faces issues of reach and cost. Since the sales depend entirely on the independant distributors , the company has to pay huge commission. This results in the increased cost of the product. Hence the products become expensive resulting in lower sales.

Amways also faces this issue. The products of Amway are excellent but very expensive. For example, the Persona brand of soaps cost Rs 30 which is almost double the rate of an ordinary soap. Persona is one of the best soaps in terms of quality but price is definitely a dampener. Another example is the range of cosmetics under the brands Attitude and Artistery . Artistery is targeted at the premium class and Attitude at the middleclass. But the price of these brands make the consumer think twice before buying it. Hence the ABOs have a tough time convincing the value proposition.

In a value conscious country like India, the expensive tag of Amway products is the singular reason for the lack of popularity of its products.

Understanding this issue, Amway launched its first corporate branding initiative in India . The brand came out with a Television campaign highlighting the customer-centric approach.