Types of Marketing
A beginners guide to the difference between Direct Marketing and Mass Marketing
By Amanda Greenslade, www.GreensladeCreations.com
Advertising and public relations are both part of the umbrella of Mass Marketing, because they reach out to the masses with long-term aims like building brand awareness. Direct Marketing targets individuals and is more likely to result in a sale, but may not necessarily support an organisation’s long-term success.
“Most advertising isn’t intended to get immediate results. Its goal is mostly long-range: intended for consumers to become aware of a product, remember it, feel good about it or continue doing ‘what they’re doing’—remain loyal to the product, cause or idea.”—E.R. Nash and Deanna Hutchinson, Open Learning Institute of TAFE, QLD, Australia (2005)
Consider the following gun and shooting analogy to help you understand how Direct Marketing differs from Mass Marketing and which marketing method is appropriate for your business or client. If you don’t like advertising being equated with the use of guns, I apologise, but it is an ideal representation. Some people may find it funny that marketers/advertisers are being equated with hunters going after their prey. In this modern world, sales figures represent the survival of not only companies, but also their suppliers and the individuals they employ. Pointing out the hunter-prey relationship between companies and individuals is apt. We are all “prey” to a variety of “hunters” no matter how involved we are in marketing (hunting) ourselves. We all buy products and services, so at regular intervals we have all been “shot” by a marketing professional’s gun.
The machine gun
The machine gun is designed to fire rifle bullets in quick
succession, usually at a rate of several hundred rounds per minute. It fires more shots in less time than a conventional hand-gun, uses up more rounds and costs more. It is also larger, heavier and harder to conceal.
Mass Marketing is like using a machine gun because it costs more money, reaches more people and doesn’t need to be targeted too specifically. It takes a large target market saturated with strong prospects (equal to or greater than the weak prospects) for it to succeed.
Like using a machine gun, Mass Marketing is best for when you don’t know much about your targets other than where to find a large number of them and how to reach them. A soldier doesn’t fire off 300 rounds without being sure he is positioned properly (eg. at the right distance). Likewise, mass marketers pay careful attention to their choice of medium (magazines, newspapers, TV etc.), their offer to consumers and the “creative” (eg. text and design).
Analysis of success is difficult because the purpose of Mass Marketing is often not specific, i.e. it is intended to foster consumer awareness, differentiate products and brands, create consumer goodwill, reinforce existing behaviour and make sales. Determining whether Mass Marketing has helped sales is often based on overall sales figures for the business, as it is sometimes hard to know exactly what prompted each sale or conversion. One way to track results from an advertisement is to make a specific offer (eg. promotion, value-add or discount voucher) so that every sale of that offer can be counted as a successful conversion from your ad.
Where a machine gun is large and hard to conceal, this relates to Mass Marketing in that it is generally very obvious that the consumer is being marketed to. The shooter can’t be sure where in the body his bullet is going to land, resulting in a lower ratio of kills than if you compare it to a hand gun. This is similar to the fact that people are less likely to respond to an advertisement than to something more personal because it doesn’t reach their heart. There is more on the next page for more on reach vs conversion.
The hand gun
A handgun is a firearm designed to be held and operated by one hand, with the other hand optionally supporting the shooting hand. Single-shot pistols are the simplest, firing—you guessed it—only one bullet. Multi-barrelled pistols had their origins in the 19th century revolvers and later developed into semi automatic pistols which typically carry around 8 to 20 rounds.
Direct Marketing is like using a hand gun because it costs less money, reaches less people and is more carefully aimed. It is most effective for businesses with a small–medium target market that is peppered with strong prospects (who may be fewer than the weak prospects).
Like using a hand gun, Direct Marketing is carefully planned and executed. It is also measured carefully afterwards. For example, the shooter generally aims for one person at a time, confirming a hit before moving to the next person. The targets are chosen specifically and the marketer knows a lot more about them, than he or she would in a Mass Marketing scenario, before selecting them.
Like a shot from a hand gun, it is more likely that Direct Marketing will result in a kill (conversion) of those it reaches, because it goes directly to their heart. This occurs because the offer is addressed to them and the marketer can be more sure it is relevant to them. Just as a hand gun is small and inconspicuous, Direct Marketing occurs in small bursts. It is subtle and doesn’t come across as much like a generic advertisement.
What they have in common
In both cases, the guns are tested before being used (marketing methods should be tested with smaller campaigns before investing large amounts of money). The bullets are chosen carefully and brought with the shooter (make decisions about products/services and the way they’re offered with the utmost care).
Reach VS Conversion
As we just saw, the machine gun (Mass Marketing) reaches a lot more people than the hand gun (Direct Marketing). Now let’s talk about conversion (kills). Three attempts (eg. three sprays with a machine gun) are more likely to kill than one. This is in line with the fact that people may respond better the third time they see an offer. This may apply to Direct Marketing as well, but it is more pronounced with Mass Marketing.
Imagine the nineteen target dummies reached by the machine gun in the picture represent the 1,715,000 women aged 25+ who read Australian Women’s Weekly. The strong prospects and weak prospects who were not reached represent those women aged 25+ who do not read AWW.
For a full page ad to run six times in AWW, it costs $204,720 (as at Jan 2010) so from this we can deduce it takes a conversion rate of 0.0034 (0.34%) to make a profit from selling a $44.80 cleaning product with six full page advertisements. These calculations assume that it takes 5,850 products sold to pay for the ad plus production and distribution costs—because each item costs $2 and has a mark-up for the wholesaler and the retailer of around 10% each. In the magazine campaign, selling a cleaning product, the seller comes out with a profit of $43,320.
The price of what is being marketed has to be just right (an analogy might be the size of the bullets), the availability widespread and easy to access (analogous with the shooter’s capacity to spray an area with bullets and be sure to hit enough people to ensure he actually kills some of them). This works well for products that are sold in retail outlets, which is why most of the ads you see in big magazines like AWW are for these kinds of products.
Now for the hand gun analogy, imagine the one target dummy reached by the hand gun in the picture represents the 90,000 people who participated in the Walk against Warming event across Australia in December 2009. The target market itself is environmentally-conscious men and women, only a small portion of which attended the walk.
To send an addressed letter to the 90,000 would cost at least $65,000 for postage, envelopes, production and printing. If the letter was offering, via mail-order, a paper pulper that produced useable sheets of paper from scraps, the conversion rate would likely be quite high because it is well targeted and it is addressed personally to the walkers. A 0.05 (5%) conversion rate would sell 4,500 devices. At $44.40 each (plus $20 p&h), the seller would make $199,800 in sales. Assuming a cost of $20 each and also subtracting the cost of the direct mail campaign, the profit would be around 10% per item. In the mail campaign, selling paper pulpers, the seller comes out with a profit of $44,800.
The profits for these two fictional campaigns were similar, although it cost the Mass Marketing seller $61,420 more than the Direct Marketing seller initially. Did you notice that the Mass Marketing approach worked best for a product that was very cheap to produce, widely available and targetable at a fairly broad market (women over 25 who read AWW)? On the other hand, the Direct Marketing campaign worked well for a product that was expensive to produce, but appealed to a very specific kind of person (a walker in an environmental demonstration). The products were sold for around the same retail price and more were sold by the magazine than the letter.
The cleaning product reached 1,715,000 and converted 5,850 (0.34%)
The paper pulper reached 90,000 and converted 4,500 (5%)
These made-up scenarios are extreme, but they do highlight the fact that Mass Marketing reaches more and converts less, whereas Direct Marketing reaches less and converts more. 5% is nearly fifteen times more than 0.34% (albeit, these percentages are purely hypothetical).
Measurement
The measurement required for successful Direct Marketing efforts is more intense than for Mass Marketing, but you would only use the latter if you were sure of your product or service’s general appeal, affordability and availability. It stands to reason that if you want to fully utilise the strengths of Direct Marketing, then you have to implement proper testing and measuring strategies. The best DM packages tie in directly with a prospect/customer database so that you can connect sales between each person and the respective campaigns. You also want to track trends overall by exporting reports for myriad sub-sets of data.
If your database infrastructure is not geared to relate campaigns with customer data, then you may want to consider getting a new database that is. One key to this infrastructure is a system for holding prospect data (potential customers) separate to your existing customers. It also needs ways to weed the weaker prospects out or to find the most effective mediums for communicating with different segments. If a new database is out of the question, you may double-up on data and encounter procedural difficulties and mix-ups. Trying to generate campaign measurement reports manually will take longer for your staff, and be more open to error, than if you designed them (with your database programmer) at the outset.
Direct Marketing can be done without measurement, but will not necessarily be effective. It’s probably better to invest your first $50,000 in a new database, than waste $65,000 on an ineffectively tested and measured campaign. If your numbers are a lot less than this (say in the thousands), then manual measurement will not be so laborious, and it will be better than nothing.
Choosing the right marketing method
When you are trying to decide which method is best suited to your product, you will need to crunch some numbers, and ask the following questions:
- What are your current sales, costs and profits? How many more products do you want to sell, in addition to your regular sales?
- How much money do you have available for marketing?
The purpose of marketing is to increase your profits in the long term and help your business grow. As you can see above, both Mass Marketing and Direct Marketing cost money. If you don’t have any room in your profit (eg. you are a small service business), then you probably can’t afford a magazine ad or a huge mailbox campaign. You may be able to afford other, cheaper things, however (like small mailbox campaigns, SMS and email marketing). If you have less than $50,000 for your campaign, you should rule out Mass Marketing altogether and be prepared to look into the cheaper Direct Marketing options.
- What is my target market? Does my product or service have broad/general appeal that’s not area-specific, or is it more of a niche market? For the purposes of this questionnaire, broad/general appeal applies to things like groceries, clothes, shoes, bags, cars, fuel, electricity, furniture, linen, stationery, electronics, appliances, rent, home loans, insurance, soap, toothpaste, crockery, lawnmowers, fast food and restaurant chains, and more. For something to have broad/general appeal, it has to be priced for the majority of consumers in the market to afford, not the richest 10%. It also needs to be available to the majority and appear to be of the right quality to the majority, not to the lowest 10%.
Almost all services are area-specific, therefore, like products that lack broad/general appeal, they are best promoted using Direct Marketing.
- How frequently is my product or service needed?
The more frequently a product or service is purchased, the more you can consider Mass Marketing to sell it, but always bear in mind what was stated at the beginning—advertising and publicity often aims to support long term success, not to trigger specific actions like purchasing. A computer, for example, has broad/general appeal that’s not area specific, but as it is only purchased once every five years (on average) per customer, it is probably better promoted via Direct Marketing than Mass Marketing. A retail outlet chain that sells computers, TVs, stereos, white goods, iPods and more, however, has a much bigger target market that is saturated more densely with strong prospects, who are buying more frequently than the computers alone, therefore it can afford to go down the Mass Marketing route. In this case, their aims is to get customers through the door and make sales (TV ads of this nature are often cheaply-produced, featuring a male shouting at you and prices flashing up red on the screen over product photography).
- Where can my target market be reached? You should brainstorm this and come up with dozens, if not hundreds of options.
In each one, determine the following:
- How many people are there altogether?
- Are strong prospects densely or sparsely populated? Remember ‘strong prospects’ are those who will gladly pay what the product or service costs simply from being exposed to the right marketing.
- What conversion rates are experienced by other marketers? If research does not reveal this information, you may need to go to an advertising or PR agency for advice.
- What offer is most likely to convert my strong prospects?
If an eye-catching advertisement in a major magazine is likely to excite the target readership for that magazine, then you might consider Mass Marketing to be an effective route. If, however, your product requires a lot more information to be divulged, requires more convincing or personalisation of the offer to each consumer, then Direct Marketing is probably better.
- What creative is most likely to convert my strong prospects?
“Creative” is a word that has become a noun in marketing jargon, and it generally refers to the copywriting and design of something (eg. an advertisement, book cover or email newsletter). There are many choices when it comes to creative, and each are intimately related to the target readership, for example:
Creative |
Target Readership |
Business examples |
Home-made, unprofessional, done ‘on the cheap’. Nb. a graphic designer can produce something like this for you if that’s what it takes to reach your audience, or you could do it yourself. Language can be casual and prices are often included. Mistakes and rough or cluttered layout are more tolerable, but should be avoided if possible. |
Lower socio-economic, average Joes wanting a bargain, older people, single people and housewives wanting a service with a personal touch, people who do not want to feel like a customer of a big corporation or franchise. |
Services. May work well for hair dressing salons, family-owned businesses, alternative medicine, network marketing and direct selling etc. |
Basic, clean, simple. Characterised by lots of wide open spaces, light coloured backgrounds (especially white and silver), unobtrusive text colours and design (eg. black or dark blue, sans serif fonts). Few images. Language should be formal and accurate. |
All ages, but especially no-nonsense 30+ working people or people without a lot of spare time. |
Optus combines this with the “Nature” approach, using the family appeal of animals in its Optus Zoo marketing theme. Anything health related like chiro or physio, tends to use the clean look. Scientific products and services etc. |
Cool, slick and youthy. Characterised by vector graphics (with perfectly smooth edges), complicated backgrounds, nice colours, borders, image-heavy, text-light. Language should be upbeat and maybe use youth-speak. |
Young people (eg. 10–30) |
This look can be seen all over the place, especially for acne skin treatments, Pentecostal church brochures, youth events and websites etc. |
Grunge. Characterised by dark and/or strong colours, images, complicated backgrounds, borders. Language should be sophisticated, humorous and accurate. |
People with a dark sense of humour and/or an interest in heavy metal, hard rock, cyberpunk, action, motorcycles, sci-fi, anti-conformism, alternative culture etc. |
May work well for radio stations, theatre groups and other cultural products/services |
Dark or gothic. Very dark background with light text, lots of red, white and black, imagery stereotypical of gothic stories (eg. cityscapes, streets, vampires, bats etc.). Language should be ironic, sarcastic and accurate. |
Jaded, intelligent people, especially those between 15 and 35. |
May work for products of a rebellious or seductive nature, eg. alcohol, condoms, men’s aftershave, certain movies or TV shows, adult shops etc. |
60s, 70s, 80s, Retro. Lots of bright colours and patterns, especially vector polka dots, stripes etc. Backgrounds tend to be cluttered. Language should be colourful, creative, comical and casual. |
People who grew up in the 60s, 70s or more recently if they have a love for that era. The fashions of the 60s–80s come back in periodically so the use of this style may need to be timed with impending trends. It will often work for happy, go lucky, middle class people born in that era, at any time. |
Can be used for almost anything, but seems most appropriate for events, music, movies and other pop culture products and services |
Nature. Lots of natural imagery, plants, animals, green and autumn colours, backgrounds may be clean and clear, or with faint patterns. Use photos, especially of open, natural landscapes with no humanity visible. Language should be positive and informative. |
Nature-lovers, greens and people interested in alternative health. Also people with pets or who love animals, but may not otherwise be into nature or alternative health. |
Optus combines this with the “Basic, clean, simple” approach, using the family appeal of animals in its Optus Zoo marketing theme. |
With all this information in mind, you should be able to decide what kind of marketing will work best for you. For the best advice, specific to your situation, it is advisable to hire a PR firm, but hopefully this document has given you an idea of whether that is within the reach of your organisation or not.
“Every advertisement must be considered as a contribution to the complex symbol which is brand image ... The manufacturers who dedicate their advertising to building the most favourable image, the most sharply defined personality for their brands are the ones who will get the largest share of these markets at the highest profit in the long run.”—David Ogilvy, USA Advertising Agency Chairman
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