Definition of Research and Applications of Responses to Direct Marketing Approaches

Introduction

Research is a key to the evolution of successful marketing strategies and programmes. It is an important tool to study buyer behaviors, changes in consumer lifestyles, consumption patterns, brand loyalty, and also forecast market changes. Research is also used to study competition and analyze the competitor’s product positioning and how to gain competitive advantage. Of late, Marketing Research is also being used to help create and enhance brand equity.

This is a new role and decidedly different from the conventional one where it was used for just studying buyer behavior or for conducting feasibility studies. In fact, because of this conventional role, Marketing Research, until the mid 1980s, was considered a luxury, which only multinationals like Lever and Procter & Gamble and their like could afford. However, it is not so now. This is because competition has increased manifold in all sectors since 1985, and especially after 1991.

Following liberalization and decontrol, most firms today find that the government does not take strategy decisions for them any more. Rather, the arena has now shifted to their boardrooms, and they do not have answers to several questions. More specifically, they do not have the answer to the question: “How to gain and retain competitive advantage?” This is where MR plays an important role. Realizing the contribution that MR makes, more and more companies are now turning towards it. FMCG firms have now realized the futility of product research without understanding the dynamics of customer decision-making.

Marketing research has often been delinked from business strategy. When that happens, most research reports become “academic” in nature and are “filed”.

Many a time, research or respondent bias makes the MR exercise a waste of resources. Often the researcher has the temptation to conclude what the top management may like to hear. For example, most chief executive and marketing chiefs would like to believe that everything about their operations is good. The researcher may find just the opposite. For example, he may find that the firm’s distribution plan and strategy is not competitive and channel members do not have faith in company’s policies. The trade has switched loyalties and the company’s penetration is now reduced to only a few select outlets who are also with the company due to their long-term association only.

Should the researcher choose to present these facts? If he or she does the management and, more so, the marketing chief may not appreciate the facts and that may mean an end to any other subsequent assignment or being relegated in the organization, a dilemma that most researchers face. But a good researcher, like a good doctor, knows that it is better to present facts and let the company decide the strategy, rather than hide it, which subsequently may even affect its survival. Therefore to make Research effective, it is important that it has a linkage wit business strategy and should respond to future or emerging scenarios in the market place. To understand the research and applications of responses to direct marketing approaches one has to first understand what direct marketing is?

What Is Direct Marketing

Direct marketing is an interactive mode of marketing through which the marketer reaches out his target market at any location. The Direct Marketing Association of USA has defined direct marketing as “an interactive system of marketing which uses one or more advertising media to effect a measurable response and/or transaction at any location”. An analysis of this definition brings out three key elements, namely:

It is an interactive system in the sense that there is a two-way communication between the marketer and his/her target market; the response or non-response of the customer completes the communication loop in the direct marketing programme. For example, when the customer fills in the response cupon in an advertisement or a catalogue and mails it, he/she communicates to the marketer and hence completes the communication loop.

Another element is measurability of response – a mentioned above the number of coupons received indicates the response rate to the marketer’s communication.

Direct marketing activities are not location specific; it is not necessary for the customer to physically interact with the marketer; he/she can establish a contact through mail, phone, fax or the internet.

As mentioned above, direct marketing is an efficient way to promote and sell products and services in a highly competitive market. The goal of direct marketing is to always get a response from the customer. Direct marketing has also been known by other terms like direct selling, mail order selling or catalogue selling.

Today direct marketing uses all these tools and is based on a customer database. In fact, the key to successful direct marketing is the development of this database.

Research and Database Development

Database marketing is the most effective way to customize the marketing mix to suit target market. This helps not only in customizing the offering but also its delivery. Given the developments in the area of information technology (Softwares like geographical information system – GIS), today it is possible to deliver the right product with the right message, at the right time to the right person. This presupposes the creation of customer’s purchase and other related information. It also includes the development of a database of potential customers.

Database marketing, therefore, is an interactive approach to marketing that uses all communication tools and media vehicles through research to reach to the target market. It is also the basis of all relationship marketing efforts of the company. The information stored in the database is used to develop customer loyalty and to identify all potential buyers for any new product or service. It also helps in identifying the most cost effective media and delivery vehicles.

Characteristics of a Good Database

Although each firm may decide to develop its own database, there are certain characteristics that help enrich it. These are:

Each customer or prospect should be treated as an individual entity and hence a separate record for him/her should exist in the marketing database. Market segments are an agglomeration of such individual customers.

Each such marketing record should contain all the relevant information and access details like name, address, telephone numbers, frequency of product use, experience with the product, industry and decision making units for organizational customer, response to any earlier direct marketing campaign, and soon.

This information should be available to all departments and employees of the company involved in the direct marketing programme to enable them to be customer friendly.

The aim of the organization should be to replace routine usage surveys with this database.

Information technology tools should be used to strengthen this database and also develop corporate responses to the customer. These tools can also be used to identify opportunities and threats in the customer environment and craft appropriate responses which will help the marketer to exploit opportunities and neutralize threats. The use of these tools should also help in optimum resource utilization.

Increasingly, firms are realizing the importance of database in targeting and creating competitive advantage. Today several organizations are also using this database for their customer relationship management programmes. Cross-selling can also be effectively managed through database marketing. This is especially true for firms operating in several products/businesses that require the same database. Citibank, for example, uses its credit card customer’s database to market several other financial products, including banking services.

Once again, information technology has further augmented these strengths. Database management, therefore, is a key to the development of an effective direct marketing programme.

Direct Marketing Mix

Communication Programme

This involves (both) creative and media decisions. The creative decisions centre around the copy platform, graphic design elements, mailers, stickers, and so forth. Consider, for example, the campaigns of Orange (Hutchison Max Telecom), a cellular phone service provider in the country. These were not only crisp but also helped in positioning. Orange as one of the most customer friendly cellular services in India. The communication of its various products like the prepaid Sim card (just talk), roaming facilities and various air time packages shared the same colors and motivate customer to buy the service.

The media used by direct marketers are mailers, telephone, television and the Internet. Direct response print and television advertising are particularly effective in generating response to the offer, especially if it is complex to understand. Also, the direct marketer today uses various outdoor retail panels (Just Talk and BPL MOTS brands of prepaid Sim card in Mumbai) and even stickers to retain the brand at the top of customer’s mind.

These also serve the purpose of a remainder.

Customer Service 

As mentioned earlier, customer service is a key input in direct marketing. In direct marketing physical contact with the customer is low and it is the quality of service that facilitates customer decision-making. Service, therefore, is an investment and cannot be ignored. The customer service mix today involves the following:

Speed and Accuracy of Order fulfillment: This includes the speed at which the customer is able to complete order form and the organization’s ability to acknowledge and execute the order. This involves the development of an appropriate order fulfillment process in which speed and accuracy hold the key to purchase and retention. In online order procurement, the company will have to pay special attention to its bandwidth and server capacity. The same holds true for marketers who use call centres to book, deliver, and service customers’ orders.

Immediate customer complaint resolution: Today, customers demand on-the-pot resolution of complaints. Given the Internet and call centres, customers look for seamless complaint management.

Other important elements of customer service: Toll free telephone numbers (1-600), money back guarantee, multiple modes of payment (credit cards, cheque, money order, VPP and so on) are giving customers flexibility.

The Jet Airways in-flight shopping mall (now withdrawn) offered all these modes thereby making it easy for customer to buy a product. Dettol, a brand of Reckitt Benckiser of India, ahs launched the ‘Healthy Home Careline’. Consumers can reach the company by dialing a toll free number and their queries are answered instantly. This, in turn, builds the image of RB as a caring company, increases the company’s interaction with customers, and also gives it access to the name and phone numbers of consumers, thus expanding its consumer database.

Timing and Sequencing

This factor involves determination of whether the product or service is offered once, as a part of the campaign, or continuously. This will obviously involve campaign decisions like whether to have bursts, pulsing, or a continuous campaign.

The Research Process

Having known the concept of direct marketing, we also have to scan through the marketing research process itself to know how this research is applied in the direct marketing approach. This process, has seven stages as mentioned below:

Problem definition related to direct marketing

Defining research objectives

Working out a research design

Deciding on the sources of data

Planning and deciding on data collection techniques and tools

Analyzing data

Making a report and presenting it to the decision maker/s

Direct Marketing Approach Through Marketing Intelligence System

The purpose of any marketing research is to provide information at a specific time on customers, trade, competition and future trends in each of these segments. Most of these research exercises help strengthen an enterprise and assist it in strategic decision making. But marketing is a war that requires continuous surveillance of markets (customers), competition, and other structural components like government policy. Based on this continuous surveillance, successful enterprises evolve their tactics to win smaller battles which help it win the war of market shares. The entire concept of market intelligence is similar to military sciences, where it is a known fact that no army can win a war without good, effective and timely information on enemy forces and the terrain on which the war is going to be fought.

Components of Intelligence System

In marketing the intelligence system has two components:

customer intelligence

competitor intelligence

Customer Intelligence

This provides useful information on a customer’s business, preferences or loyalties, personal demographic details, and also “whims and fancies”. A good intelligence system will even tell a marketer what to do and not do when he or she is with the customer. Like what words to use and which ones to avoid, the proper dress code, habits or tendencies to watch out for, and so on. This information becomes useful in planning sales calls on customers. It is also useful in evolving advertising and promotion programmes. Most often this data is collected by sales people either as a separate stand-alone exercise or as a part of their regular sales call.

Competition Intelligence

This gives information on strengths and weaknesses of each competitor in the territory, the strategy and tactics being used by them, and how the customer procures competitor brands. This also provides inputs on the key persons in competitor firms. This information is collected on a regular basis by sales people and I continuously updated.

Most marketing researches involve studying consumer’s perceptions, beliefs, preferences, and motivations. Some may involve studying the psychological dimensions of the dealer, retailer, or sales person’s behavior. In a way, most research exercises measure attitudes of individuals. An attitudinal study involves specifying:

The class of persons, objects, events, or states to be observed.

The environmental conditions under which the observation takes place.

The operations to be performed in making the observations.

The instruments to be used to perform the operations and

The observations to be made.

Extending this concept to marketing, the attitude of a consumer towards a particular brand of a product or service can be understood as a function of:

the number of consumers of that brand.

at a specific time and in a given geographical area, who are

personally interviewed, using a

specified attitudinal scale, to obtain

the response information provided by the attitude scale

In other words, consumer attitudes towards a brand, product, or service may be understood as numerical ratings on a like-dislike scale.

Scales used to Measure the Attitude of the Customers in the Customer Intelligence System

To measure the attitudes of a consumer, a researcher has to understand different scales, situations in which they may be used, or the analytical tools that can be used to analyze the responses. Scales are of four types: (a) nominal, (b) ordinal, (c) interval, and (d) ratio.

Nominal Scales

These are the least restrictive of all the scales. Here numbers are used for identification purposes only. A typical example of this scale is telephone numbers allotted to subscribers. An other illustration is classification of retail outlets “carrying brand X” and those “not carrying brand X”. These scales permit only the most elementary mathematical analysis. For example, mode is a common statistical tool used here. Let us consider the example of different brands of toilet soaps being marketed in a given area. On the basis of the number of shops keeping different brands of toilet soaps, we can find out the most popular brand of soap in a particular geographical area, or the brand sold by maximum number of shops in that area.

Ordinal Scales

These are the ranking scales. These scales require the customer’s ability to distinguish between elements according to a single attribute and direction. Consider, for example, a person who may be asked to rank different brands of cars on fuel efficiency.

Suppose the response is:

                                     Maruti 800 CC - 1

                                     Indica - 2

                                     Santro - 3

                                     Zen - 3

                                     Esteem - 4

                                     Accent - 5

In this situation an ordinal scale has been used. It may be understood that mere ranking of different brands in a product class (in the above case, car brands) does not permit the researcher to conclude about the differences separating brands on a specific attribute. In the above example, the only conclusion that can be drawn is that Maruti 800 is the most fuel efficient car in this area. But by how much and how different it is from others on fuel efficiency cannot be assessed by this scale.

An ordinal scale contains all the information of a nominal scale, as equivalent entities receive the same rank. Ordinal scales lend themselves to statistical analysis like median, quartile, percentile, and other summary statistics.

Interval Scales

These scales allow an individual to make meaningful statements about differences separating two objects. However, it may be noted that the zero point of this scale is arbitrary. The most common example of this scale is a thermometer measuring temperatures in Fahrenheit and centigrade scales. While an arbitrary zero is assigned to each scale, equal temperature differences are found by ‘scaling’ equal volumes of expansion of mercury.

A typical example of interval scale is the preference for a brand of perfume exhibited by a consumer on the following scale

I like it the most
I like it

I neither like nor dislike it

I dislike it

I dislike it the most

Here, each response refers to specific degree of consumer preference.

Responses measured on these scales can be analyzed using statistical tools like mean, standard deviation, and correlation coefficient. Advanced statistical analyses using t-test and f-test can also be done on responses measured on this scale.

Ratio Scales

These are at the top end of scaling techniques as all arithmetical operations are possible here. A ratio scale possesses a unique zero point. It contains all the information of earlier-mentioned scales.

Having considered the choice of scales, the researcher should now understand that all attitude measurement procedures are concerned with having people respond to specific stimuli according to a certain set of instructions. These stimuli may be advertising copy, themes, packaging, shelf display, or even a sales person’s presentation. The response may involve assessing attractiveness of an advertisement, appeal of a package, or credibility of presentation. The respondent’s task is to express his/her response on a scale (could be any, chosen by the researcher). An important point to be considered by the researcher is whether the emphasis in the analysis is to be on the respondents or the stimuli, or both. Suppose the marketing research is on detergent powders (stimuli) and the housewives have been asked to evaluate different brands on one attribute “gentleness on hands”. Now three types of scaling might be identical.

Respondent-centered approach: Here the researcher examines systematic variation across respondents.

Response approach: Here the researcher examines both (i) and (ii). Most marketing researches have scales and analysis that measure based on response approach.

In measuring attitudes, several scaling techniques are used. Some of these are Thurstones Case V, Osgood’s Semantic Differential, Likert’s Summated Scale, and the Q-Soct. Among these, the most common are the Semantic Differential and Likert’s Summated scales. “The semantic differential is a type of quantitative judgement method that results in (assumed interval) scales that are often further analyzed by such techniques as factor analysis; (the procedure) enables the researcher to probe both the direction and the intensity of respondents’ attitudes towards such concepts as corporate image, advertising image and brand image”. The most common approach is to ask respondents to describe a firm on bipolar adjectives on a seven point scale, as shown in table.

These seven points on the scale represent equal intervals. Each point measures the intensity of the respondent’s perception or feeling and the more the respondent moves towards a particular pole, the more positive or negative he or she feels. Specifically, the two ends of the scale represent strong feelings, while the middle or the 4th point reflects indifference. The scale is quantified as being +3, +2, +1, 0, -1, -2, -3. In this example, the firm is perceived as being traditionalist, highly unreliable, strong but non-customer focused, and non-responsive. Likewise, a firm may measure its competitive image against its major competitors. Figure shows a customer’s perception of firm X vis-à-vis firms Y and Z. Here, we note that customers have a highly negative image of firm X and a highly positive image of firm Y.

Today semantic differential scales are being used in image measurement, comparing competitive brands and services, analyzing effectiveness of advertising and other promotional inputs, and to determine the attitudinal characteristics of buyers of a particular product class or brands within a product class. These scales are most popular in marketing research

Interview Schedule

At times a questionnaire is not able to give an insight into the rationale of a customer’s feeling, or factors that will lead to the success of a new technology like e-mail and voice-mail or new products that a firm may consider introducing. It is for these and several similar reasons that an interview schedule is developed. The purpose of this schedule is to study in depth an object, event, or a group of people. Unlike a questionnaire the responses here are unstructured.

The limitation of an interview schedule is that it does not lend itself to tabulation and, generally, analysis of responses is difficult. It is for this reason that its use is limited and the sample size, too, is much smaller than the one in a market survey using questionnaires.

Association Tests

Of late, the researcher’s focus has been on qualitative research, or researching the psychological dimension of consumer behavior. We mentioned earlier that in most direct questioning, using a questionnaire or an interview schedule, the respondent is generally guarded and gives responses more from the conscious part of his or her psyche. To get to the subconscious mind, marketing researchers are using several psychological instruments like association tests, sentence completion tests, and thematic appreciation tests (TAT). These tests are believed to reveal the customer’s perception of a product, brand, or firm’s image. These tests can also give information on the customer’s perception of brand personality as also the personality and lifestyle of the target customer group.

Some of the other commonly used tools in qualitative research, aimed at discovering consumers hidden thoughts, are the use of metaphors and stories and even asking them to recall their experiences with a brand or any other event. Memories of experiences are often told through a story. Consumer reconstruct them each time use them to communicate their earlier experiences. But memories are also communicated in a metaphoric manner.

The overload of memories, metaphors and storytelling strongly influence consumers’ consumption experience and behaviors. By providing particular metaphors, researchers can guide customers in weaving their stories of past, current and future experiences in the market-place. Consumers, in turn, use their own metaphors to express their thoughts, feelings, and emotions. Stories about brands demonstrate how brands are represented in the consumer’s mind.

Tools for Data Collection
The researcher has to decide on the appropriate tool for data collection. These tools are:

Questionnaire – used for the survey method.

Interview schedule – used mainly for exploratory research

Association tests – primarily used in qualitative research

Questionnaire

This is the most popular tool for data collection. A questionnaire contains questions that a researcher wishes to ask his respondents. It is im-portant that these questions be put in a language the customer understands and finds easy to answer. As far as possible, all technical terms or words that can have multiple meanings and interpretations should be explained. This is essential so as to have consistency in responses from all sample respondents. For example, words like “regularly”, “frequently”, “occasion-ally”, need to be explained. A question like “How regularly do you buy a de-tergent powder?” and having the choices “always, frequently, occasionally, sometimes, and never”, will not get the desired response if not explained. So the researcher may explain these words in the following manner:

The shopping cycle means every time you go to buy groceries for your house. This could be weekly, fortnightly, or monthly.

Steps in Questionnaire Design

It is important that the questions are unloaded, to avoid any researcher bias. It is also important that the information collected must be believable and unbiased. Just as researcher bias has to be avoided, respondent bias must also be avoided.

Further, there must be a flow in a questionnaire. For example, “How many children do you have?” and then asking “your marital status” is improper. The question on marital status should logically precede the one of the number of children.

A questionnaire should be pre-tested before final printing. The pre-testing should be for the following:

Are the questions clear to the respondents?

Is the researcher getting answers to the questions? Or does the respondent understand questions in the same way as the researcher does?

Are there any terms or words requiring explanation?

Are there any sensitive “spots” or “questions” which respondents would feel uncomfortable with and would not want to respond to? Typically, these could be questions relating to respondent’s income, age, or personal particulars. To avoid such drawbacks, put these questions with multiple choices in different ranges. Also, with regard to income, it is best to ask annual family income as it is less threatening.

What is the time that an average respondent is taking to complete the questionnaire? It is important to remember long questionnaires lead to fatigue and also puts off the respondent. Non-response or inappropriate response is very common in a long questionnaire. So the key is in avoiding respondent fatigue by having a short questionnaire.

Does the customer feel interested in the research project? Is his/her interest sustained while responding to the questionnaire?

Is there a logical flow among the questions?

Are the investigators able to explain the purpose and questions, if required?

Thus through questionnaires the data are collected and analysed with the help of the statistical tools and then the interpretations are reported.

Future of Direct Marketing in India and the Consumer Behavior

The future of direct marketing in India is dependent on the following:

Reaching out to Non-Metro/Non-Urban Markets:

As metro and urban markets get saturated by products and services promoted in both general and direct marketing models, the key to any direct marketing campaign lies in expanding its reach to rural and semi-rural markets. Infrastructural constraints have so far come in the way of the direct marketer. But with rural cyber cafes, satellite televison reaching rural areas, telecom booths, and mobile telephony gaining popularity, it should be possible for marketers to reach out to their target market in these areas. Post offices are located in the farthest corner of India and service village with a population as low as 20 households. These offices can be used as an effective medium to communicate, deliver and even service the rural customer. IDBI, ICICI, SBI and other financial institutions are today directly marketing their mutual funds and other financial products through the Indian postal system. Thus, the key to success in the Indian market lies in the firm’s ability to access rural markets.

Enhancing Credibility of the Offer

The Indian customer generally does not buy a product or service until he/she has seen it, touched it, and experienced it. Therefore, these are key ingredients in the customer’s selection process and the direct marketer has to enhance his credibility as he cannot offer these benefits. He thus needs to pay special attention to ensuring that the customer’s experience with the product exceeds his/her expectations. Also, he needs to focus on service to ensure speedy settlement of any claims. Credibility is the key to success in direct marketing.

Wider use of Debit and Credit Card

Direct marketing’s success in India will be dependent on the wider use of debit and credit cards as mode of payment by both the customer and the marketer. This involves a shift of transactions from cash to non-cash modes and hence a change in the customers’ and sellers’ mindset.

Emergence of Specialized Database Firms

Another key factor in the success of direct marketing is the evolution of specialized database firms. It is an expensive proposition both in terms of money and time to create customer database. This makes direct marketing feasible only for large firms. A very large component of the Indian economy consists of small- and medium-sized firms who cannot afford to create this database. Hence the emergence and evolution of firms specialized in database management will contribute to the success of direct marketing in India.

To conclude, direct marketing has arrived in India, but is still an urban and metro phenomenon. It is gradually widening out to non-urban areas too. It is important to remember that competitive marketing strategies involve using a combination of general and direct marketing approaches.