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This article reviews reasons for and against direct and indirect marketing methods and distribution channels for new products and services. Such methods fall generally into two categories, direct and indirect marketing.
Direct marketing aims at a specific audience or consumer profile to stimulate a direct response to the product or service marketed and to measure the response. Direct marketing can be intrusive and annoying when businesses don’t use it in comprehensive marketing strategies. The most popular direct marketing methods are by (1) Direct Mail, (2) Telemarketing, and (3) Online.
In favor of direct mail is that customers get product information and place orders from their homes or offices easily. Against is the flood of junk mail that makes direct mail unwanted by association and inattentively thrown away or destroyed.
In favor of telemarketing, conversations offer opportunities to answer questions, take product orders, and do customer service. Against is that telemarketers make uninvited cold calls that interrupt customers and talk them into buying products they then decide they don’t want. Telemarketing is particularly unpopular in areas with Do Not Call registries.
In favor of direct marketing online is the ability to reach consumers as they conduct research and make purchase decisions. Against are that not everyone is online, and those that are may not be online at the best times. Social media work best in combination with other marketing methods. All print marketing should show links to the business website.
Indirect marketing typically involves a third-party distributor or seller. Indirect marketing does not aim at a specific consumer audience as does direct marketing. An example of indirect marketing is the traditional storefront window display. The retailer’s commercial space comes between the producer and the consumer; therefore, it is indirect.
Indirect marketing enables businesses to attract a large and diverse consumer pool. Indirect marketing through third parties provides businesses with access to amenities that they do not have, retail space as an example. However, indirect marketing affects product profit margin direct marketing cuts out the third-party middleman for larger returns.
Mixing Direct and Indirect Marketing
A successful marketing strategy need not go entirely one way or the other between direct or indirect channels. There are in fact many ways to use both main options for a profitable marketing mix.
Direct marketing presents an offer to buy or to learn more about what’s for sale. The purpose is to get the customer to take action to buy the product by dialing the phone, using a promotional code, or attending a presentation.
Indirect marketing makes no attempt at immediate sales but instead focuses on building relationships of trust by finding out what consumers want and helping them find it. Consumers search the Internet for answers to their questions or solutions to their problems. Indirect marketing offers them knowledge and advice in blogs, social media, newsletters, and videos.
Indirect marketing aims at consumers with questions needing answers. Indirect marketing builds brand recognition by suggesting how to solve problems with products and services that can help
Indirect marketing is not a short-term strategy for generating sales quickly. It takes time to build trust with consumers, months, even years.
For startup businesses, time is of the essence. They need to begin marketing indirectly to customers as soon as possible. A good place to start is online through blogs and social media to build interest and brand recognition. If their marketing succeeds in raising consumer demand for their products and services, they then need to develop distribution channels.
Products and services must find ways to reach consumers. Distribution channels transfer products and services profitably to retail sales outlets or directly to customer homes.
Distribution channels organized and managed by the businesses they serve are direct distribution channels. Intermediary middlemen operate indirect distribution channels (example here). Firms that use direct distribution require their own logistics teams and transport vehicles. Those with indirect distribution channels must set up relationships with third-party distributors.
Direct Distribution Channels
Direct channels tend to be expensive to establish, sometimes demanding substantial capital investment in warehouses, logistics, transport vehicles, and driving staff. After its components are in place, however, a direct channel is likely to be more economical and efficient in operation than an indirect channel. Direct selling, though in some cases difficult to manage on a large scale, often gives manufacturers better connections to consumer bases than do indirect channels.
Indirect Distribution Channels
The most challenging aspect of indirect distribution channels is the necessity to entrust third-party middlemen with product handling and customer interaction. The most successful of such intermediary logistics agents, however, are adept at product deliveries in ways that most manufacturers are not. Indirect channels also free manufacturers from delivery system startup costs. In harmonious relationships, they are much simpler and more cost-effective to manage than are direct distribution channels.