3.case study e_bay_direct marketing & dircet selling system
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This document discusses direct marketing and direct selling. It begins by defining direct marketing as an interactive marketing system that uses advertising media to generate a measurable response. It then discusses eBay as an example, describing how eBay sent out catalogs through newspapers to promote holiday shopping on their site. The document also provides definitions and discussions of direct selling, multilevel marketing, advantages and disadvantages of direct marketing, examples of companies that use direct marketing, and prospects and problems of direct selling.
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3.case study e_bay_direct marketing & dircet selling system
- 1. ACCMAN Cases on Direct Marketing & Direct Selling System 107/04/15 1
- 2. Contents • Definition of Direct Marketing • Advantages & Problems in Direct Marketing • Prospects of Direct Marketing • Definition of Direct Selling • Advantages & Problems in Direct Selling • Prospects of Direct Selling 207/04/15 2 ACCMAN Cases on Direct Marketing & Direct Selling System
- 3. Company: eBay eBay Inc. is an American Internet company that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide. • Founded in 1995, eBay is now a multi-billion dollar business with operations localized in over thirty countries. 307/04/15 3 ACCMAN Cases on Direct Marketing & Direct Selling System
- 4. eBay Sending Out Catalogs- What Gives Here? That’s right, during the first Christmas season of the new millennium, eBay sent out some 23 million full-color glossy catalogs in the form of inserts in more than fifty newspapers all over the United States. • The eight-page catalog displayed products ranging from Harry Potter trading cards to Palm Pilot PDAs. 407/04/15 4 ACCMAN Cases on Direct Marketing & Direct Selling System
- 5. eBay Sending Out Catalogs- What Gives Here? Why dot-com like eBay issue “old- fashioned” printed catalogs to be distributed through even more old-fashioned newspapers? • Well, even in an era of new-wave technology, is still paying attention to another old-fashioned idea- the need to understand and respond to consumer behavior. 507/04/15 5 ACCMAN Cases on Direct Marketing & Direct Selling System
- 6. eBay Sending Out Catalogs- What Gives Here? Why dot-com like eBay issue “old- fashioned” printed catalogs? • eBay knows that around the holiday season, consumers traditionally like to reach for catalogs to get into the spirit of Christmas shopping. Catalogs provide consumers with wish lists and gift ideas and help foster a buying mood as shoppers glance through the pages. 607/04/15 6 ACCMAN Cases on Direct Marketing & Direct Selling System
- 7. eBay Sending Out Catalogs- What Gives Here? With 6.5 million items listed at any given time on eBay’s web-site, did you think the company was looking to directly sell only few items listed in the eight-page catalog? • But eBay was hoping to persuade consumers who had not given any thought to using eBay for holiday shopping to consider it after looking at the catalog. • After all, while millions of people have used eBay, many more millions have not. eBay knows that plenty of those nonusers read newspapers and thumb through catalogs. 707/04/15 7 ACCMAN Cases on Direct Marketing & Direct Selling System
- 8. eBay Sending Out Catalogs- What Gives Here? So, by putting millions of catalogs in millions of newspapers, eBay hopes to get a few million more eBay shoppers and the millions of dollars in fees and commissions that go with those new eBay users. 807/04/15 8 ACCMAN Cases on Direct Marketing & Direct Selling System
- 9. eBay Sending Out Catalogs- What Gives Here? Do you think the case (Sending out Millions of Catalogs) is related to Direct Marketing concept? 907/04/15 9 ACCMAN Cases on Direct Marketing & Direct Selling System
- 10. Now Another Case… How many of you are looking to start your own business after completing Master degree or in near future? 1007/04/15 10 ACCMAN Cases on Direct Marketing & Direct Selling System
- 11. Case of an Entrepreneur An interesting example of direct marketing is the case of a person who started his business in a locality of Delhi with 1500 apartments. He got leaflets printed announcing free home delivery of any product required with his residential address and phone number. • That cost him Rs 2,000. He also paid Rs 150 each to the newspaper vendors for inserting this leaflet in newspapers. • Once a week, he went to Sadar Bazar to stock goods at home. He not only earned money to quit his job but also substantial goodwill in the locality. 1107/04/15 11 ACCMAN Cases on Direct Marketing & Direct Selling System
- 12. Definition of Direct Marketing Direct marketing is an interactive system of marketing that uses one or more advertising media to effect a measurable response and/or transaction at any location. • Direct mail in the form of letters, flyers, brochures and catalogs are heavily used. • Others are newspapers, magazines, television, radio, telephone, internet used in recent years. 1207/04/15 12 ACCMAN Cases on Direct Marketing & Direct Selling System
- 13. Characteristics of Direct Marketing Direct marketing is an interactive system of.. • Unlike direct selling, direct marketing can involve both consumer and industrial market. • Sellers can be manufacturers, wholesalers, retailers or any other type of agency, institution or individual. • Similarly, buyers can range from individual consumers to giant corporations, institutions or government agencies. 1307/04/15 13 ACCMAN Cases on Direct Marketing & Direct Selling System
- 14. Advantages of Direct Marketing 1. Focused approach 2. Cost effective- very effective for the niche products 3. Easy international reach 4. Consumers’ desire for convenience in shopping 5. Immediate impact and flexible- TV ads take a great deal of time to develop from first idea to final execution 6. Tailored message- for a particular group of consumers 7. Measurable- possible to link a particular sale as being a response of particular Direct Marketing activity 8. Opportunity to build a database 9. DM already has been, and further enhanced by technology 1407/04/15 14 ACCMAN Cases on Direct Marketing & Direct Selling System
- 15. Disadvantages of Direct Marketing 1. Fundamental limitation- potential customers cannot see and examine the actual product before making a purchase. (perceived risks higher on the part of consumers) 2. Response rates are very low- generally industry response rate is 1 to 2 percent only 3. Costs- initial customer acquisition costs are high- high cost per thousand reached; and database development can be expensive. 4. DM is marked by intense competition- thousands of firms 5. Image problem- unethical and dishonest practices 1507/04/15 15 ACCMAN Cases on Direct Marketing & Direct Selling System
- 16. Companies: Direct Marketing Direct marketing is - interactive system or approach to marketing - uses one or more advertising media - expected to results in a measurable response Products sold examples Suitable for both B2C & B2B sales, mail order, TV shopping Firms involved examples Dell computers, HP printer cartridges 1607/04/15 16 ACCMAN Cases on Direct Marketing & Direct Selling System
- 17. Definition: Direct Selling The sale of a consumer product or service, in a person-to-person manner, away from a fixed retail location, where the company offers opportunities to an independent contractor sales force. 1707/04/15 17 ACCMAN Cases on Direct Marketing & Direct Selling System
- 18. Multilevel Marketing/ Network Marketing A compensation system within direct selling, where a distributor/salesperson can earn money not only on their own personal sales, and not only on the sales of a person personally recruited by them, but also on sales of persons recruited by their personal recruits. 07/04/15 18 ACCMAN Cases on Direct Marketing & Direct Selling System
- 19. Direct Selling 1907/04/15 19 ACCMAN Cases on Direct Marketing & Direct Selling System Problems - Prospects not aware of direct selling as a channel - Negative impression about direct selling - Consumer availability at home - Perceived risk of buying from direct selling agents - Availability of direct sales people Prospects - Large untapped market (potential consumers) - Changing lifestyle, less time for retail visit - Retailers shifting to self-service formats
Editor's Notes
- Targeting both B2C and B2B market…..
- A personal digital assistant (PDA), also known as a palmtop computer,[1][2] is a mobile device that functions as a personal information manager. Current PDAs often have the ability to connect to the Internet. A PDA has an electronic visual display, enabling it to include a web browser, but some newer models also have audio capabilities, enabling them to be used as mobile phones or portable media players. Many PDAs can access the Internet, intranets or extranets via Wi-Fi or Wireless Wide Area Networks. Many PDAs employ touchscreen technology. The term PDA was first used on January 7, 1992 by Apple Computer
- A personal digital assistant (PDA), also known as a palmtop computer,[1][2] is a mobile device that functions as a personal information manager. Current PDAs often have the ability to connect to the Internet. A PDA has an electronic visual display, enabling it to include a web browser, but some newer models also have audio capabilities, enabling them to be used as mobile phones or portable media players. Many PDAs can access the Internet, intranets or extranets via Wi-Fi or Wireless Wide Area Networks. Many PDAs employ touchscreen technology. The term PDA was first used on January 7, 1992 by Apple Computer
- A personal digital assistant (PDA), also known as a palmtop computer,[1][2] is a mobile device that functions as a personal information manager. Current PDAs often have the ability to connect to the Internet. A PDA has an electronic visual display, enabling it to include a web browser, but some newer models also have audio capabilities, enabling them to be used as mobile phones or portable media players. Many PDAs can access the Internet, intranets or extranets via Wi-Fi or Wireless Wide Area Networks. Many PDAs employ touchscreen technology. The term PDA was first used on January 7, 1992 by Apple Computer
- Then what was the idea behind ..distribiting million of cataloog ? Think..think..
- Then what was the idea behind ..distribiting million of cataloog ? Think..think..
- Then what was the idea behind ..distribiting million of cataloog ? Think..think..
- Then what was the idea behind ..distribiting million of cataloog ? Think..think..
- Then what was the idea behind ..distribiting million of cataloog ? Think..think..
- Then what was the idea behind ..distribiting million of cataloog ? Think..think.. There are three key elements of this definition. 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 andother 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.
- Then what was the idea behind ..distribiting million of cataloog ? Think..think..
- Focused approach- useful peomotional tool for niche products..there is less wastage Cost effective- very effective for the niche products Easy international reach- easy to adopt international target market, it offers enormous geographical range Consumers’ desire for convenience in shopping—high proportion of working women and demands of a fast-paced lifestyle leave less time in shopping in retail stores Immediate impact and flexible- TV ads take a great deal of time to develop from first idea to final execution Tailored message- for a particular group of consumers Measurable- possible to link a particular sale as being a response of particular DM activity Opportunity to build a database- over time, the details on customers DM already has been, and will continue to be, enhanced by technology developments Focused approach- useful peomotional tool for niche products..there is less wastage Cost effective- very effective for the niche products Easy international reach- easy to adopt international target market, it offers enormous geographical range Consumers’ desire for convenience in shopping—high proportion of working women and demands of a fast-paced lifestyle leave less time in shopping in retail stores Immediate impact and flexible- TV ads take a great deal of time to develop from first idea to final execution Tailored message- for a particular group of consumers Measurable- possible to link a particular sale as being a response of particular DM activity Opportunity to build a database- over time, the details on customers DM already has been, and will continue to be, enhanced by technology developments
- Fundamental limitation- potential customers cannot see and examine the actual product before making a purchase. (perceived risks higher on the part of consumers) Response rates are very low- generally industry response rate is 1 to 2 percent only Costs- initial customer acquisition costs are high- high cost per thousand reached; and database development can be expensive. DM is marked by intense competition- thousands of firms Image problem-unethical and dishonest practices
- Others.. AOL Time Warner- Audio, Video, Books Fundamental limitation- potential customers cannot see and examine the actual product before making a purchase. (perceived risks higher on the part of consumers) Response rates are very low- generally industry response rate is 1 to 2 percent only Costs- initial customer acquisition costs are high- high cost per thousand reached; and database development can be expensive. DM is marked by intense competition- thousands of firms Image problem-unethical and dishonest practices
- Personal selling involves…everttything is planned whom to meet..all 8 steps are involved in personal selling..but direct selling is a compensation system where agent works on commission
- Classical Direct Selling, Multi-Level Marketing (MLM), Network Marketing and Referral Marketing are selling systems Variety of compensation plans (financial reward) and administrative systems Main difference between Multi-Level Marketing and Network Marketing - structure and benefits of the COMPENSATION PLAN