2 ] Unconventional Channels

We are fully acquainted with conventional / traditional channels i.e.

Manufacturer > Distributor > Wholesaler > Retailer > Shop-Keeper > Customer

Extent of channel-partners vary from products-to-products and organization to

organization.

Since last 5 years, it has been observed that, many organizations prefers to have contact
with customers directly instead of through channel-partners. These channels are referred
as “Direct Marketing Channels or Unconventional Channels”. These are unusual
techniques in performing marketing activities with a goal of attaining maximized outputs
from minimal resources and expenses.

Marketing of products or services can be done by various ways-n-means. Direct marketing

is one of the effective channel that takes the organization to the final customer / recipient
by interaction between the two. It operates on one-to-one basis and totally opposite to
conventional marketing.

“Direct marketing is de-massified marketing; it deals with customer on a one-to-one basis.

The marketer approaches the customers individually, communicates with them on single-
level basis and even offers products that are modified to suit the requirements of the
chosen customers.”

Benefits -

• supports accurate segmentation and sharper targeting of the market – formulation

of more fine-tuned marketing strategies;
• establishing relationship with the customers due to closer contact which results into
retention of the same-creation of competitive advantage;
• cost-effective due to elimination of costs associated with channels, advertising-
does not involve marketing channels / stores, advertising / mass promotion;
• facilitates special attention to large accounts-every firm does not have equal
weight-age of customers ( Pareto’s Law of 20:80 > 20% customers contribute 80%
of revenue either of entire business or selective product ) : helps to pay due
attention to customers who give the major chunk of the business;
• helps the customers also-shopping at doorstep, saves time, convenient and hassle-
free, educating themselves about new products/brands-applicable to industrial
consumers also.

Forms of Direct Marketing -

• mail-order / catalogue;
• response;
• database;
• telemarketing;
• home-shopping;

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 • e-marketing ( on-line / on-web ).

Tele Marketing

Telemarketing is a method of direct marketing in which a salesperson solicits to

prospective customers to buy products or services, either over the phone or through a
subsequent face to face or Web conferencing appointment scheduled during the call.

Telemarketing can also include recorded sales pitches programmed to be played over the
phone via automatic dialing. Telemarketing has come under fire in recent years, being
viewed as an annoyance by many.

Some people believe that in the 1950s, Dial-America Marketing, Inc became the first
company completely dedicated to inbound and outbound telephone sales and services.
The company, spun-off and sold by Time, Inc. magazine in 1976, became the largest
provider of telephone sales and services to magazine publishing companies. The term
telemarketing was first used extensively in the late 1970s to describe Bell System
communications which related to new uses for the outbound WATS and inbound Toll-free
services.

The two major categories of telemarketing are Business-to-business and Business-to-

consumer.

Subcategories -

• Lead Generation - the gathering of information;

• Sales - using persuasion to sell a product or service;
• Outbound - proactive marketing in which prospective and pre-existing customers
are contacted directly;
• Inbound - reactive reception of incoming orders and requests for information.
Demand is generally created by advertising, publicity, or the efforts of outside
salespeople.

Procedure >

Telemarketing may be done from a company office, from a call centre, or from home. It
may involve either a live operator or a recorded message, in which case it is known as
"automated telemarketing" using voice broadcasting. "Robo-calling" is a form of voice
broadcasting which is most frequently associated with political messages.

An effective telemarketing process often involves two or more calls. The first call (or series
of calls) determines the customer’s needs. The final call (or series of calls) motivates the
customer to make a purchase.

Means of identifying prospective customers -

• past purchase history with Manufacturers / Dealers / Outlets / Franchisee;

• requests made by buyer in past;

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 • mobile operators, credit / debit cards, shares trading account, investment made
through Fund managers / Brokers / Asset management cos. & Telephone directory;
• information passed-on by prospective buyer who had received call earlier;
• collection of details from another company’s data-base either directly or through
mediator : in kind or simply purchased;
• participation by customer in any of the competition / quiz / exhibition / fair etc.

The qualification process is intended to determine which customers are most likely to
purchase the product or service.

Charitable organizations, alumni associations, and political parties often use telemarketing
to solicit donations. Marketing research companies use telemarketing techniques to survey
the prospective or past customers of a client’s business in order to assess market
acceptance of or satisfaction with a particular product, service, brand, or company. Public
opinion polls are conducted in a similar manner.

Telemarketing techniques are also applied to other forms of electronic marketing using e-
mail or fax messages, in which case they are frequently considered spam by other people.

Negative perceptions and Criticism -

Telemarketing has been negatively associated with various scams and frauds, such as
pyramid schemes, and with deceptively overpriced products and services. Telemarketing is
often criticized as an unethical business practice due to the perception of high-pressure
sales techniques during unsolicited calls. Telemarketing calls are often considered an
annoyance, especially when they occur during the dinner hour, early in the morning, or
late in the evening.

Regulations -

Telemarketing is subject to regulatory and legislative controls related to consumer privacy

and protection. The Many professional associations of telemarketers have codes of ethics
and standards that member businesses follow to encourage public confidence.

Some jurisdictions have implemented "Do Not Call" lists through industry organizations or
legislation; telemarketers are restricted from initiating contact with participating
consumers. Legislative versions often provide for heavy penalties on companies which call
individuals on these listings.

Technology -

• Auto-dialer
• Automatic call distributor
• Customer relationship management
• Predictive dialer
• Private Branch exchange

Benefits of Telemarketing -

• Accelerates development - external telemarketing not only accelerates your

business growth, it can also respond flexibly to your changing needs at different
times of the year;

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 • Makes your Company seem bigger - pitching for the larger contracts is always
competitive. What better way to profile yourself as a Company of reasonable size
than by the initial contact coming from another "member of the team";
• Immediate feedback - trends, competitive information and Clients changing
requirements are a valuable bi-product of your project;
• Reduces your work load – Allows you and your team to focus on the brightest
opportunities;
• Preserves your time for your specialist skills - Your Clients in professional and
creative spheres especially welcome this aspect.

Features of Telemarketing-

1. Decide what you want to gain from each call - information or an appointment ?
2. Plan your call accordingly: have to hand a list of key companies for whom your
company has worked, as well as the range of benefits of the service or product in
question.
3. Work with a tidy desk and be specific with the subject.
4. Make a clear introduction, including your name and the company name.
5. Ask open-ended questions, the ones beginning, WHAT, WHY, WHEN, HOW, WHERE,
WHO.
6. Give the person time to answer and don't feel tempted to fill silences with more
words.
7. Match your most relevant area of service/type or product to the type and size of
company your are calling --no-one is interested in everything you do.
8. Listen for buying signals, very often not what is said but what is not said ... "not
interested at the moment" ...."Not looking for quite that type of product" ... "not the
person dealing with it" .... Dealing with what? What type of product would they like?
And when will they be interested?
9. Listen all the time, not interrupting and at the end of the call summarize agreed
action to the potential customer.
10. Try to match your voice and enthusiasm to the other person; generally speaking it
doesn't impress to either underwhelming or overwhelming !

Examples :

• BPO - Business Process Outsourcing ( Wipro, Infosys, Mphasis, Godrej, Satyam,

Accenture, WNS etc. )
• KPO - Knowledge Process Outsourcing;
• LPO – Legal Process Outsourcing;

E-Marketing

Marketing has pretty much been around forever in one form or another. Since the day
when humans first started trading whatever it was that they first traded, marketing was
there. Marketing was the stories they used to convince other humans to trade. Humans
have come a long way since then, ( Well, we like to think we have) and marketing has
too.

The methods of marketing have changed and improved, and we've become a lot more
efficient at telling our stories and getting our marketing messages out there. E-marketing
is the product of the meeting between modern communication technologies and the
age-old marketing principles that humans have always applied.

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That said, the specifics are reasonably complex and are best handled piece by piece. So
we’ve decided to break it all down and tackle the parts one at a time. This week we’ll be
looking at the "what" and "why" of E-marketing, outlining the benefits and pointing out
how it differs from traditional marketing methods. By the end of the series we're pretty
sure you'll have everything you need to tell better marketing stories.

Meaning of E-marketing >

Very simply put, E-marketing or electronic marketing refers to the application of marketing
principles and techniques via electronic media and more specifically the Internet. The
terms e-Marketing, Internet marketing and online marketing, are frequently
interchanged, and can often be considered synonymous.
E-marketing is the process of marketing a brand using the Internet. It includes both
direct response marketing and indirect marketing elements and uses a range of
technologies to help connect businesses to their customers.
By such a definition, E-marketing encompasses all the activities a business conducts via
the worldwide web with the aim of attracting new business, retaining current business
and developing its brand identity.

Why is it important ?

When implemented correctly, the “Return on investment (ROI)” from e-marketing can far
exceed that of traditional marketing strategies. Whether you're a "bricks and mortar"
business or a concern operating purely online, the Internet is a force that cannot be
ignored. It can be a means to reach literally millions of people every year. It's at the
forefront of a redefinition of way businesses interact with their customers’ reach.

Reach >

The nature of the internet means businesses now have a truly global reach. While
traditional media costs limit this kind of reach to huge multinationals, e-marketing opens
up new avenues for smaller businesses, on a much smaller budget, to access potential
consumers from all over the world.

Scope >

Internet marketing allows the marketer to reach consumers in a wide range of ways and
enables them to offer a wide range of products and services. E-marketing includes,
among other things, information management, public relations, customer service and
sales. With the range of new technologies becoming available all the time, this scope can
only grow.

Interactivity - Whereas traditional marketing is largely about getting a brand's message

out there, e-marketing facilitates conversations between companies and consumers. With
a two-way communication channel, companies can feed off of the responses of their
consumers, making them more dynamic and adaptive.

Immediacy - Internet marketing is able to, in ways never before imagined, provide an
immediate impact. Imagine you're reading your favourite magazine. You see a double-
page advertisement for some new product or service, maybe BMW's latest luxury sedan or
Apple's latest iPod offering. With this kind of traditional media, it's not that easy for you,
the consumer, to take the step from hearing about a product to actual acquisition.

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With e-marketing, it’s easy to make that step as simple as possible, meaning that within a
few short clicks you could have booked a test drive or ordered the iPod. And all of this can
happen regardless of normal office hours. Effectively, Internet marketing makes business
hours 24 hours per day, 7 days per week for every week of the year.

By closing the gap between providing information and eliciting a consumer reaction,
the consumer's buying cycle is speeded up and advertising spend can go much further in
creating immediate leads.

Demographics and Targeting - Generally speaking, the demographics of the Internet

are a marketer's dream. Internet users, considered as a group, have greater buying
power and could perhaps be considered as a population group skewed towards the
middle-classes.

Buying power is not all though. The nature of the Internet is such that its users will tend to
organize themselves into far more focused groupings. Savvy marketers who know where to
look can quite easily find access to the niche markets they wish to target. Marketing
messages are most effective when they are presented directly to the audience most likely
to be interested. The Internet creates the perfect environment for niche marketing to
targeted groups.

Adaptivity and Closed Loop marketing - Closed Loop Marketing requires the constant
measurement and analysis of the results of marketing initiatives. By continuously
tracking the response and effectiveness of a campaign, the marketer can be far more
dynamic in adapting to consumers' wants and needs.

With e-marketing, responses can be analyzed in real-time and campaigns can be

tweaked continuously. Combined with the immediacy of the Internet as a medium, this
means that there's minimal advertising spend wasted on less than effective campaigns.

Maximum marketing efficiency from e-marketing creates new opportunities to seize

strategic competitive advantages. The combination of all these factors results in an
improved ROI and ultimately, more customers, happier customers and an improved bottom
line.

Guerrilla Marketing

This is an unconventional system of promotions that relies on time, energy and imagination
rather than a big marketing budget. The end users / consumers are referred or targeted
unexpectedly. Customers may not be aware about the product / service.

• Buzz marketing – Interaction with prospective / potential buyers so as emphasize

the product value and benefits. Such efforts create anticipation and excitement
amongst the customers.
• Experimental marketing – An emotional appeal to the customers towards buying
products and or service. Attachment to a Brand, Product, Individual or Concept.
• Viral marketing – Marketing is being done through social networks with a goal of
creation of brand / product awareness ultimately for Sales and Profits. Internet and
Verbal publicity are the examples.

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Distribution Channels - Terminology and Structure

• Distribution is the physical flow of goods through channels;

• Channels are made up of a coordinated group of individuals or firms that perform
functions that add utility to a product or service;
• Distributor – wholesale intermediary that typically carries product lines or brands on
a selective basis;
• Agent – an intermediary who negotiates transactions between two or more parties
but does not take title to the goods being purchased or sold.

Channels : Consumer Goods, Industrial Products, Services

Consumer Products

Piggyback Marketing –

• channel innovation that has grown in popularity;

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 • One manufacture distributes product by utilizing another company’s distribution
channel;
• Requires that the combined product lines be complementary and appeal to the
same customer.

Industrial Products

Establishing Channels

• Direct involvement – the company establishes its own sales force or operates its
own retail stores;
• Indirect involvement – the company utilizes independent agents, distributors,
and/or wholesalers;
• Channel strategy must fit the company’s competitive position and marketing
objectives with in each national market.

Working with Channel Intermediaries

• Select distributors – don’t let them select you;

• Look for distributors capable of developing markets, rather than those with a few
good customer contacts;
• Treat local distributors as long-term partners, not temporary market-entry vehicles;

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 • Support market entry by committing money, managers, and proven marketing
ideas;
• From the start, maintain control over marketing strategy;
• Make sure distributors provide you with detailed market and financial performance
data;
• Build links among national distributors at the earliest opportunity.

We have already studied various “Types of Channels” in Chapter 1. However,

some more text is added below.

Global Retailing

• Department stores;
• Specialty retailers;
• Supermarkets;
• Convenience stores;
• Discount stores and warehouse clubs;
• Hypermarkets;
• Super Centers;
• Category killers;
• Outlet stores.

Environmental Factors

– Saturation in the home country market

– Recession or other economic factors
– Strict regulation on store development
– High operating costs
–
Critical Question - What advantages do we have relative to the local competition?

Global Retailing Strategies

 Organic - Company uses its own resources to open a store on a green field site or
acquire one or more existing retail facilities;
 Franchise - Appropriate strategy when barriers to entry are low yet the market is
culturally distant in terms of consumer behavior or retailing structures;
 Chain Acquisition - A market entry strategy that entails purchasing a company with
multiple existing outlets in a foreign country;
 Joint Venture - This strategy is advisable when culturally distant, difficult-to-enter
markets are targeted.

Culturally Close

D : Organic A : Chain
Acquisition Easy to Enter
Difficult to Enter
C : Franchise B : Joint
Venture

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 Culturally Distant

Innovation in Global Retailing

a) Innovation takes place only in the most highly developed systems;

b) The ability of a system to successfully adapt innovations is directly related to
its level of economic development;
c) Even when the economic environment is conducive to change, the process
of adaptation may be either hindered or helped by local demographic
factors, geographic factors, social mores, government action, and
competitive pressures;
d) The process of adaptation can be greatly accelerated by the actions of
aggressive individual firms

Service Marketing

A service is the action of doing something for someone or something. It is largely

intangible [ i.e. not material ]. A product is tangible [ i.e. material ] since you can touch
it and own it. A service tends to be an experience that is consumed at the point where it is
purchased, and cannot be owned since is quickly perishes. A person could go to a café one
day and have excellent service, and then return the next day and have a poor experience.
So often marketers talk about the nature of a service as:-

1) Inseparable - From the point of providing to point of consumption. For example, you
cannot take a live theatre performance home to consume it [ a DVD of the same
performance would be a product, not a service ];
2) Intangible - cannot have a real, physical presence as does a product. For example,
motor insurance may have a certificate, but the financial service itself cannot be touched
i.e. it is intangible;
3) Perishable - in that once it has occurred it cannot be repeated in exactly the same
way. For example, once a 100 meters Olympic final has been run, there will be not other
for 4 more years, and even then it will be staged in a different place with many different
finalists;
4) Variability- since the human involvement of service provision means that no two
services will be completely identical. For example, returning to the same garage time and
time again for a service on your car might see different levels of customer satisfaction, or
speediness of work.
5) Right of ownership - is not taken to the service, since you merely experience it. For
example, an engineer may service your air-conditioning, but you do not own the service,
the engineer or his equipment. You cannot sell it on once it has been consumed, and do
not take ownership of it.

Characteristics of a Service -

What exactly are the characteristics of a service? How are services different from a
product? In fact many organizations do have service elements to the product they sell, for
example McDonald’s sell physical products i.e. burgers but consumers are also concerned
about the quality and speed of service. Is staff cheerful and welcoming and do they serve
with a smile on their face? There are 5 characteristics to a service which will be discussed
below :-

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1. Lack of ownership
You cannot own and store a service like you can a product. Services are used or hired for a
period of time. For example when buying a ticket to the USA the service lasts may be 9
hours each way , but consumers want and expect excellent service for that time. Because
you can measure the duration of the service however consumers become more demanding
of it;

2. Intangibility - You cannot hold or touch a service unlike a product. In saying that
although services are intangible the experience consumers obtain from the service has an
impact on how they will perceive it. What do consumers perceive from customer service ?
The location, and the inner presentation of where they are purchasing the service;

3. Inseparability - Services cannot be separated from the service providers. A product

when produced can be taken away from the producer. However a service is produced at or
near the point of purchase. Take visiting a restaurant, you order your meal, the waiting and
delivery of the meal, the service provided by the waiter / waitress is all apart of the service
production process and is inseparable, the staff in a restaurant are as apart of the process
as well as the quality of food provided.

4. Perishable Nature - Services last a specific time and cannot be stored like a product
for later use. If traveling by train, coach or air the service will only last the duration of the
journey. The service is developed and used almost simultaneously. Again because of this
time constraint consumers demand more.

5. Heterogeneity - It is very difficult to make each service experience identical. If

traveling by plane the service quality may differ from the first time you traveled by that
airline to the second, because the airhostess is more or less experienced.

A concert performed by a group on two nights may differ in slight ways because it is very
difficult to standardize every dance move. Generally systems and procedures are put into
place to make sure the service provided is consistent all the time, training in service
organizations is essential for this, however in saying this there will always be subtle
differences.

Service Marketing Mix - Having discussed the characteristics of a service, let us now
look at the marketing mix of a service. The service marketing mix comprises off the 7’p’s
-

Product

Price Physical
Distributi
Servic on
e
Place Process

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 Promotio People
n

Lets now look at the remaining 3 p’s :-

• People - An essential ingredient to any service provision is the use of appropriate

staff and people. Recruiting the right staff and training them appropriately in the
delivery of their service is essential if the organization wants to obtain a form of
competitive advantage. Consumers make judgments and deliver perceptions of the
service based on the employees they interact with. Staff should have the
appropriate interpersonal skills, aptitude, and service knowledge to provide the
service that consumers are paying for. Many British organizations aim to apply for
the Investors In People accreditation, which tells consumers that staff are taken
care off by the company and they are trained to certain standards;

• Process - Refers to the systems used to assist the organization in delivering the
service. Imagine you walk into Burger King and you order a Whopper Meal and you
get it delivered within 2 minutes. What was the process that allowed you to obtain
an efficient service delivery? Banks that send out Credit Cards automatically when
their customers old one has expired again require an efficient process to identify
expiry dates and renewal. An efficient service that replaces old credit cards will
foster consumer loyalty and confidence in the company;

• Physical Evidence - Where is the service being delivered ? Physical Evidence is

the element of the service mix which allows the consumer again to make judgments
on the organization. If you walk into a restaurant your expectations are of a clean,
friendly environment. On an aircraft if you travel first class you expect enough room
to be able to lay down ! Physical evidence is an essential ingredient of the service
mix, consumers will make perceptions based on their sight of the service provision
which will have an impact on the organizations perceptual plan of the service.

To certain extent managing services are more complicated then managing products,
products can be standardized, and to standardize a service is far more difficult as there are
more input factors i.e. people, physical evidence, process to manage then with a product.

Horizontal Marketing

Joining of two or more agencies on the same level for the purposes of pursuing a new
marketing opportunity. Usually a horizontal marketing system is established so that the
individual members can combine resources to make the most out of the marketing
situation. Products from each member can be marketed and / or distributed together. The
two products are marketed together, allowing the two companies to combine their
marketing resources and accomplish much more than either one might accomplish alone.
Agencies in a horizontal marketing system also have the option of combining their capital
and production capabilities, in addition to their marketing and distribution resources, to
produce synergistic benefits for all members. Some of the examples are given below :-

• Stereos / DVDs are offered along with Cars / Buses / Trucks either having tie-up with
manufacturers or with dealers etc.;

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 • Ice-Cream varieties are offered along with Lunch / Dinner in dining halls;
• Soaps / Detergents are offered with House-hold appliances;
• Financial products viz. Banking / Insurance / Mutual Funds

E.g. Tata-Fiat Strategic alliance-cum-JV, Strategic alliance between various Banks and
Private Organizations offering Financial products

Multi-Channel Marketing

It is marketing process using many different marketing channels to reach a customer. In

this sense, a channel might be a retail store, a web site, a mail order catalogue, or direct
personal communications by letter, email or text message. The objective of the company
doing the marketing is to make it easy for a consumer to buy from them in whatever way is
most appropriate. To be effective multi-channel marketing needs to be supported by good
supply chain management systems ( SCM ), so that the details and prices of goods on offer
are consistent across the different channels. It might also be supported by detailed
analysis of the return on investment from each different channel, measured in terms of
customer response and conversion of sales. Some companies target certain channels at
different demographic segments of the market or at different socio-economic groups of
consumers

Multi-channel marketing is offering customers more than one way to buy something - for
example, from a Web site as well as in retail stores. For manufacturers, multi-channel
marketing also includes the use of partners, sometimes known as channels, who market
directly to the customer as consultants, re-packers, or retailers.

For retailers, it is claim that, in addition to offering the customer more options, multi-
channel marketing allows a business more opportunities to interact with customers - each
channel can help promote the other channels. Since Web site and phone-in mail orders
collect information about the customer that a retail sale may not, these channels make it
possible to develop mailing lists for future promotions and branding campaigns. e.g. FMCG,
Consumer Goods, Mobile Products & Services, Insurance & Financial Products.

Vertical Channel Marketing

This phenomenon is being widely used by the business-houses / marketers in almost every
segments. This is nothing but “Traditional Channel”. Process starts with the manufacturer
and he reaches the final / end customer either through conventional way or direct /
unconventional way. Strategy depends upon the nature of product / service as well as
market-currents / market potential. Joining producers, wholesalers, and retailers in the
production and distribution of products. There are three major types of vertical marketing
systems, and each uses different means for setting up leadership and power in the
system :-

• corporate, where coordination and conflict management are attained by common

ownership;
• contractual, where coordination and conflict management are attained through
contractual agreements among members of the system;
• administered, where leadership is assumed by one dominant system member.

The purpose of a vertical marketing system is to eliminate conflicts arising from each
company's pursuit of its own financial objectives.

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