Organizations, and especially companies, need to use their marketing activities to reach people who are interested in the products and/or services they offer. The Internet and digitization have opened up a variety of new ways to achieve this. Some of the largest tech companies, for example, finance themselves almost exclusively by providing platforms or solutions that enable organizations to communicate ever more directly with their potential customers. However, this raises the question of whether the continuously increasing volume of direct marketing or direct response marketing is a problem. This post will look at when and to what extent direct marketing makes sense for organizations, what potential dangers it poses for consumers, and what alternatives exist.
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When organizations try to communicate with their (potential) customers or other stakeholders, they essentially resort to two different strategic approaches to (external) marketing, which are, however, fundamentally different from each other: Direct (Response) Marketing and/or Brand Marketing. In the following, the two approaches will be examined in a little more detail with regard to their application and objectives.
We are aware that the term direct marketing is only suitable to a limited extent here and that a distinction should actually be made between the various forms. For reasons of simplification, however, we have deliberately decided to use an umbrella term in the following.
Direct marketing is a strategy in which organizations communicate directly with their potential customers without using an intermediary or medium. This is by no means a new invention, as direct marketing or direct advertising was already practiced in the 19th century via the sending of letters. Such marketing activities are usually based on a pre-selection of the addressees in order to ensure that there is a higher chance that the recipients will actually make a purchase. In addition, pre-selection enables personalization of marketing, as existing interests, preferences and needs, as well as personal information that is publicly available, can be taken into account and used strategically. Direct response marketing goes one step further and usually aims at an immediate reaction of the addressees with the help of an explicit call-to-action. Since direct marketing in most cases only aims to satisfy short-term needs, building long-term customer loyalty is not a central element here. The situation is different with brand marketing.
Expenditure in the area of direct marketing is regarded as a necessary cost (e.g., for customer acquisition), whereas expenditure in the area of brand marketing can rather be understood as a long-term investment in the development of the company’s own brand. The company’s own brand is thus an asset that contributes to value enhancement. In contrast to direct marketing, the aim of brand marketing is not the direct sale of products and/or services, but to increase the company’s own perception and visibility. Increased visibility is intended to build up a loyal customer base in the long term and create recognition value. Increased sales success is therefore not the intention, but only an indirect consequence of brand marketing activities. However, it is important that the organization can clearly reflect its mission statement and its understanding of values so that there are no discrepancies in perception. If this succeeds, it is often the foundation for a strong basis of trust and improves long-term customer loyalty.
It is not easy to make a qualified statement as to which of the two approaches is more suitable, as the respective situation and environment of the organization should always be taken into account. Both approaches have explicit advantages but also limitations. Perhaps the greatest advantage of direct marketing is that organizations are able to interact with a pre-selected group and thus can directly target addressees who they assume have a general interest in the products or services being presented. Pre-selection also means that such measures are often less expensive – compared with strategies that do not target a restricted group – or at least more cost-effective. In addition, direct marketing activities are usually quantifiable and the success of the measures measurable or at least directly observable, making subsequent control or adjustment easier. As already indicated above, however, direct marketing is not suitable for the long-term development of a loyal customer base. Rather, such approaches are continuously modified and developed to reach new target groups or to improve the appeal of an existing target group. In contrast to brand marketing, direct marketing measures thus require significantly more micro-management. However, if the goal of marketing activities is not to increase sales figures in the short term, but to build up a loyal customer base or to gain a reputation for trust, organizations should rather resort to measures in the field of brand marketing. Although an investment in building up one’s own brand is not associated with a guaranteed increase in value, it is often profitable in the long term, since the recognition value and the leap of faith can have a positive impact on sales figures and, in the best case, customers are prepared to pay a price premium for the products and/or services.
The importance and economic benefits of a unique brand are undisputed, but this status may still not be desirable for all organizations. For one-time purchases or a geographically limited offering, the existence of a brand may not be of high importance. The same could be true if there are no substitutes or only weak competition. For some organizations, the investment in brand building is also simply too high and financially unsustainable. However, brand marketing could be particularly relevant for repetitive purchases where there is no high price sensitivity. A suitable example of this is grocery shopping in the supermarket. Brand recognition and customer trust can subconsciously influence buying behavior. Direct marketing cannot do this, but it is suitable for reaching a pre-selected audience for a new product or service at low cost. Small or young organizations in particular can focus on direct marketing to gain initial customers and record their first sales. Once they have found their place in the market and are competitive, they can then expand their marketing measures to include brand marketing approaches, if this is purposeful.
However, it is also important to note at this point that direct marketing can also pose a danger to consumers if organizations deliberately choose manipulative approaches to achieve sales. Often, individual insecurities or weaknesses are directly addressed in order to force an emotional purchase decision. When a direct response is required in the context of advertising, consumers should always reconsider whether they actually want to respond. However, this should by no means mean that an explicit call-to-action must always be associated with a manipulative intention.
As long as direct marketing is used responsibly and does not target individual insecurities or weaknesses to force a purchase decision, this approach is a valid form of communication for organizations. Small or emerging organizations, in particular, can benefit from the lower cost and targeted communication with a pre-selected audience when trying to acquire their first customers or launch a new product or service. However, if the goal is to build a loyal customer base or create recognition, organizations should use the brand marketing approach. Both forms have their raison d’être in practice, and the choice of which approach is appropriate always depends on the current situation and the organization’s environment.