Chapter 17: Direct and Online Marketing: The New Marketing Model

Benefits to Sellers

For example, Mead Johnson's "Enfamil Family Beginnings" direct-mail program builds relationships with expectant and new mothers. It begins with a note of congratulations to expectant mothers, followed by a series of mailings rich with information about infant nutrition and health. Samples of Enfamil are timed to the mother's expected due date. "Now we're number one [in sales]," says Mead Johnson's director of consumer relationship marketing. "This program has had a huge impact on that."⁵ Similarly, P&G's Pampers Parenting Institute Web site builds relationships by offering parents of young children more than just product information. It gives ongoing advice on baby development, health, and safety; a newsletter; a resource library; and an "ask our experts" feature where they can get answers to personal parenting questions.

Building direct relationships: Mead Johnson's "Enfamil Family Beginnings" direct mail program builds relationships with expectant and new mothers.

Because of its one-to-one, interactive nature, the Internet is an especially potent direct-marketing tool. Companies can interact online with customers to learn more about specific needs and wants. In turn, online customers can ask questions and volunteer feedback. Based on this ongoing interaction, companies can increase customer value and satisfaction through product and service refinements.

Direct marketing via the Internet and other electronic channels yields additional advantages, such as reducing costs and increasing speed and efficiency. Online marketers avoid the expense of maintaining a store and the accompanying costs of rent, insurance, and utilities. Online retailers such as Amazon.com reap the advantage of a negative operating cycle: Amazon receives cash from credit card companies just a day after customers place an order. Then it can hold on to the money for 46 days until it pays suppliers, the book distributors and publishers.

By using the Internet to link directly to suppliers, factories, distributors, and customers, businesses like Dell Computer and General Electric are wringing waste out of the system and passing on savings to customers. Because customers deal directly with sellers, online marketing often results in lower costs and improved efficiencies for channel and logistics functions such as order processing, inventory handling, delivery, and trade promotion. Finally, communicating electronically often costs less than communicating on paper through the mail. For instance, a company can produce digital catalogs for much less than the cost of printing and mailing paper ones.

Online marketing also offers greater flexibility, allowing the marketer to make ongoing adjustments to its offers and programs. For example, once a paper catalog is mailed, the products, prices, and other catalog features are fixed until the next catalog is sent. However, an online catalog can be adjusted daily or even hourly, adapting product assortments, prices, and promotions to match changing market conditions.

Finally, the Internet is a truly global medium that allows buyers and sellers to click from one country to another in seconds. A Web surfer from Paris or Istanbul can access a Lands' End catalog as easily as someone living on 1 Lands' End Lane in Dodgeville, Wisconsin, the direct retailer's hometown. Thus, even small online marketers find that they have ready access to global markets.

	Consider how businesses in the traditional retail industry have tried to harness the benefits of online direct marketing.