Unlike advertising, direct marketing involves direct communication between a firm and its target customers to generate a response or transaction. Direct marketing also involves the use of a much wider range of different forms of communication than advertising. These include mail (direct mail/catalogues), telephones (telemarketing), the traditional broadcast and print media (direct response advertising via television, radio, newspapers and magazines), and new electronic media (the Internet, ‘Kiosks’).
Central to all direct marketing to existing customers is the use of a database that contains, at the very least, their names and addresses or telephone numbers. More sophisticated databases can contain information on the previous purchases made by the consumer, their preferences and financial status.
Direct marketing firms trying to reach new customers often rent lists containing the contact details of people whose demographic characteristics, or purchase habits, suggest they could be a prospective customer. For example, a list of subscribers to a ski magazine might represent a potential market for a sports clothing catalogue. These lists commonly contain thousands of names. When direct marketing firms rent a list they are interested in the particular characteristics shared by people on that list.
The names on a list become important individuals to the firm only when those individuals reply to an offer and become customers. Once this occurs, good direct marketing firms seek to serve those customers on a personal basis and maintain accurate records of the purchases and preferences of those customers for that purpose. For example, a direct marketing firm might use its computer records to remind its busy customers of birthdays for which they have sent presents in previous years. Such purchase information is useful to direct marketing firms as a means of serving their customers, avoiding being out of stock on popular items, and identifying buying trends to meet the needs of large numbers of customers.