What are direct marketing and interactive marketing? 567
These entirely new types of organization are
not controlled by sellers. They are either neutral
or working for buyers.
The Internet has the potential to increase
the efficiency of the direct model exponentially
through a reduction in transaction costs and
materials sourcing costs, superior supply chain
management and a greatly enhanced ability to
tailor the product to the buyer’s specification.
In principle, it is immaterial whether access is
achieved through a PC, iTV or a mobile phone.
In practice, the ‘front end’ can affect the
quantity and quality of the information that can
be exchanged.
To the customer, the direct model is not
always the answer. Many people prefer to go to
the shops or send for a sales representative. In
fact, our channel preferences are likely to
depend on what we are buying. Many com-
panies find multichannel marketing pays.
Multichannel marketing
Multichannel marketers also use direct market-
ing. Earlier we referred to GUS, the buyers of
jungle.com. GUS is a multichannel retailer
selling through catalogues, websites and its
Argos stores.
Tesco is a multichannel retailer, although
its website sales are dwarfed by its store-based
sales. Producers, too, may use multiple sales
channels. GM (Vauxhall) and Ford sell (a few)
cars directly to private motorists on the web.
IBM sells direct and through dealers. British
Airways sells direct and through agents. Maga-
zine publishers, such as The Economist and
Reader’s Digest, sell both through newsagents
and through direct subscription. Charities raise
funds through direct mail, through charity
shops, through events and through street
collections.
Some companies have spawned direct
brands. Prudential insurance launched Egg as a
direct brand. First Direct is, of course, a
subsidiary of HSBC. Direct Line is owned by
the Royal Bank of Scotland.
Home shopping catalogues have diversi-
fied both to website trading and to high street
retailing. Lakeland and Past Times are exam-
ples. Next is an example of a high street retailer
spawning a home shopping business.
For most of these companies, the logic of
stripping out costs by conforming exclusively
to a direct model does not work. They do better
by offering customers a wider choice of ways to
deal with them. In a few cases differential
pricing may be used, magazine subscription
being a prime example, but in most cases the
pricing is the same and the inventory is much
the same.
Next believes that its catalogue and web-
site assist shop sales and vice versa. By offering
customers the widest possible choice of ways to
browse and buy, they maximize the return on
their marketing investment.Table 22.1 The direct model
Features Benefits ExamplesOn-line, fax, telephone and mail transactions Lower overheads First Direct
Catalogues and websites Cuts out middlemen easyJet
Faster stock turn Dell
Facilitates exporting La Redoute