Small vs Large Firms – Direct Marketing

Direct Marketing concerns any form of publicising of a company through a channel that immediately reaches the customer and/or consumer of a product; but the form of Direct Marketing this post will focus on is Direct Mailing. Yeah, a posh name for junk mailing and leafleting. Despite being infamous, however, it is a hugely successful form of marketing and a common feature of Promotional Mixes – although is this strategy more beneficial to large or small businesses?

As a cheap method – low overheads, requires no specialist skills, easy to implement – this is a popular strategy for small or new businesses wishing to gain a foothold in the local market, for instance take-away restaurants delivering menus. The benefits are obvious: not only does targeting specific local residents increase return on investment, small businesses often lack the working capital to afford mainstream promotional channels. Marketing is always the first place short-cuts are taken in budgeting; small firms need to adopt a cost-minimisation attitude to all areas of their business, while simultaneously promoting themsleves in what is often a very competitive local market, a monoplositic market for instance. In addition to this, delivery is likely to be done by the owners in their spare time. This increases the, albeit low, chances of being read as it is not bundled in with other junk mail – like larger companies who outsource the nitty-gritty marketing jobs to the Royal Mail or leaflet distribution companies.

But this is a strategy widely adopted by large companies too – even PLCs. Although their marketing is not as likely to be as efficient in geographically targeting market segments as small firms, they are more likely to be effective at targeting consumers with other similar characteristics, like buying habits. Larger firms benefit from one of many economies of scale: the ability to purchase expensive, well-targeted mailing lists from third-parties or even use internal information management to produce their own mailing lists. This means that their return on investment is increased; however, in comparison to other aspects of the Promotional Mix – where large firms often diversify themselves – this will still remain low. Yet, larger firms can afford to outsource the designs of leaflets to a professional, external company – there will be no cheesy Microsoft Publisher advertisements that severely undermine’s small firms chances improving their PR among consumers.

However who will benefit more from direct marketing? The answer: small businesses. Although this depends entirely on what the company objectives are, because it is more likely to form an important role in the Promotional Mix – and therefore vital to success – smaller firms are thus better placed to concentrate their resources. While, on the other hand, larger companies may not fully utilise the potential of direct marketing if they are too busy with other elements of their Promotional Mix – a diseconomy of scale. Hence, marketing management once again proves to be mission-critical.

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