Advantages and Disadvantages of Direct Marketing

The term marketing implies the single goal of profit. It is categorized into two, direct marketing and indirect marketing and there is a significant line of difference between the two. Direct marketing is basically business from manufacturer to consumer without the involvement of middlemen, whoever it is. This is generally done by mailing the consumer or contacting him directly, so he can know about the products. The use of media advertisements is very limited and whatever little use is made includes only the demonstration of their products with call back numbers. Direct marketing is a boon and a bane, both in some respects:

Advantages:

- Direct marketing involves direct business. So it is cost beneficial for consumers, as there is no price hike due to wholesalers or retailers.
- Marketing executives can state certainly of the exact response to their products.
- The profit or loss can be more accurately judged.

Advantages and Disadvantages of Direct Marketing

Disadvantages:

- Sometimes, direct mailing offends the customers and many do not endorse it as they say it inhibits their private lives.

But most marketing managers are in support of this kind of business. The various forms in which direct business is made are:

- Direct mailing: Here, paper mails are sent to the selected groups of people, who likely to give positive response e.g. the paper mails of latest food processor is sent to all homes where house wives are resident so that immediate response is seen. Also CDs can be used as demonstrating media.

- Email Marketing: Here, emails are sent to all the selected customer categories with repeated intervals of time. But most of these are put into trash and spams. So the effectiveness of this form cannot be predicted.

- Telemarketing: In telemarketing, calls are made directly to the consumers and the concerned product is advertised. People sit at call centers to sell products on behalf of their clients. But this form of direct business is quite unpopular and most people oppose the uninvited calls. It was initially made illegal but later on new laws were re-enforced and calls are now made only to those who don't mind them.

- Voicemail: Telemarketing created a lot of consumer opposition and consumers would abuse the ones advertising on the phones. In order to avoid this, voicemail marketing was introduced, wherein; the entire advertisement is digitally recorded and presented.

- Use of coupons: Coupons are attached to direct mails and sent to the consumers. These generally advertise and give cost benefit to the consumers. So they avail these coupons and respond fast.

- Television marketing: Advertisements are given on the television and demos are with toll-free call back numbers or certain websites for the consumer to get in touch with the manufacturers.

- Broadcast faxing: This is the least popular form of direct marketing. The ads are directly faxed to the consumers.

Direct marketing can thus become successful only if the entanglements with the consumer are good. It can be B2B or B2C. It measures exact consumer response.

Advantages and Disadvantages of Direct Marketing
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James Copper is a writer for http://www.capsco.co.uk

Understand the Advantages and Disadvantages of Unrelated and Related Diversification

As a small business owner looking for business growth, a diversification strategy of acquisition can be very attractive. But you need to understand the differences between related diversification and unrelated diversification before you invest. To diversify in your business, your markets, or your products can be costly; therefore, invest in efficient diversification.

Typically businesses diversify through acquisition. Why diversify? The reasons need to be focused on quick growth and/or less expensive growth. However, conduct a strategic analysis to investigate whether or not the growth decision will result in a return on investment that is high enough to cover the risks associated with acquisitions.

What are the most efficient diversification strategies for your business? To diversify efficiently through acquisition means ensuring that you have built, or will build, strategies to increase your competitive advantage, to improve economies of scale and to improve your cost structure, to satisfy customers' needs quickly, or to achieve your business plan.

Understand the Advantages and Disadvantages of Unrelated and Related Diversification

Business owners need to assess the advantages and disadvantages of related or unrelated diversification.

Advantages and Disadvantages of Related Diversification:

A related strategy is when you add or expand existing products, services or markets. For example, an automotive dealership that buys a detailing business (cleans, washes, polishes cars - both inside and outside) has engaged in related diversification.

The advantage of this kind of related strategy is that it provides easier expansion: you already know the industry you operate in and you can leverage that knowledge.

The disadvantage of this strategy is that if there is a seasonal or cyclical downturn in the industry, you will feel the decline in both the dealership and the detailing business. The impact could be severe. There can also be issues with integrating two businesses, and with over-estimating the financial returns. Would it have been more cost effective to simply contract-out the detailing in the example above?

Advantages and Disadvantages of Unrelated Diversification:

An unrelated strategy is when you add new, or unrelated, products, services, or markets. For example, the same automotive dealership may decide to purchase the restaurant next door. There is no direct fit between the two businesses (although maybe employees and customers eat at the restaurant next door). The reason to buy the business is that the owner of the dealership wanted to get into a business that was dissimilar, had different seasonality, good potential for high returns (although the restaurant business has some high risk/high failure statistics).

The advantage of buying an unrelated company is that you reduce the risk of putting "all your eggs in one basket"; if the business, or the industry, is hit hard by the economy, or competition, or other success factors, then owning an unrelated business may help to offset the slump. In this example, you can also control some of the customer base for the restaurant (e.g. give your automotive customers waiting for a service a coupon for the restaurant).

Why invest in unrelated diversification? Because you may be able to invest in a new product or new market that has "peaks" when your business has "valleys". Many businesses have seasonality highs and lows; if you can acquire a business that has a high when your business has a low, you can offset the low periods. Or the unrelated diversification investment may bring with it cost efficiencies (such as subletting some of your office or plant space to the new business; or sharing/consolidating some of the administration costs of running a business - human resources, accounts payable and receivable, shipping and warehousing, sales, and more). Increased profit potential drives an investment in unrelated acquisition.

Understand the Advantages and Disadvantages of Unrelated and Related Diversification
Check For The New Release in Health, Fitness & Dieting Category of Books NOW!
Check What Are The Top Cooking Books in Last 90 Days Best Cheap Deal!
Check For Cookbooks Best Sellers 2012 Discount OFFER!
Check for Top 100 Most Popular Books People Are Buying Daily Price Update!
Check For 100 New Release & BestSeller Books For Your Collection

To find out more about efficient diversification and how to assess the risk and reward of diversifying, please visit Diversification as a Strategy.

Kris Bovay is the owner of Voice Marketing Inc, a business and marketing services company. Kris has 25 years of experience in leading large, medium and small businesses. For more small business resources and services visit More For Small Business Copyright 2008 - 2009 Voice Marketing Inc.