Direct to Consumer Marketing
The popularity of direct to consumer marketing is at an all-time high. We tell you what DTC marketing is, what its benefits are, and what strategies are involved.
There is no way to count how many different ways the internet has changed society and business operations. But one of these ways is the rise of direct to consumer marketing.
Direct to consumer marketing started with mail-order catalogs. The adoption of the internet was a complete game-changer for product manufacturers as companies entered people's homes in new and innovative ways.
What Is Direct To Consumer (DTC) Marketing?
The definition for direct to consumer marketing is fairly simple: Your company forgoes third-party vendors and sells its product directly to the consumer.
Traditionally, business models included at least three different parties: the manufacturer (product creator), the retailer (product seller), and the consumer (product buyer). DTC marketing skips the retailer by marketing and selling directly to the consumer.
Under the traditional method, the retailer in the middle reaps the benefits by raising prices and selling the products for more than what they paid. In this way, large-scale retailers make billions in profits. Manufacturers only make money when they reduce their profit margins and increase consumer costs.
For these reasons, it’s clear to see why both product manufacturers and customers prefer DTC product purchasing.
What Are The Benefits Of Direct To Consumer Marketing?
Although this strategy has risks, there are benefits of marketing directly to consumers and cutting out the middleman of a business transaction.
Some of these potential benefits include:
The most significant benefit of direct to consumer marketing is the control offered to the manufacturer.
After a manufacturer sells its product to a brick and mortar retailer, they lose all control over what happens next. For example, when the price increases substantially, the increase negatively impacts consumer purchasing and brand loyalty.
Another issue for manufacturers is when retailers have designated areas for similar products. So your competition sits directly beside your product. The only thing separating them is packaging and price.
And when faced with a choice, a consumer who has never tried two products or brands before typically makes an uninformed decision. Sometimes, they’ll make these uninformed decisions based on price.
But by selling directly to the customer, you retain control of the price. So you can sell anytime and anywhere without battling direct competition on the shelves.
It Is Less Complicated
Dealing with large-scale box retailers is a complicated ordeal. They are a business, and their model is to make as much money as possible. As a result, they negotiate the lowest possible prices for products when purchasing.
The less money they buy a product for, the more money they make when reselling. It’s not uncommon for retailers to demand exclusivity and some retailers only carry specific brands.
Fees, contracts, and exclusivity rights are a fraction of the complications involved with influential retailers. Making a product and then selling it directly to your consumer eliminates these complicated proceedings.
Better Customer Relations
Dealing directly with customers allows your company to acquire your customers’ data better. Your company learns who buys your products, and you can alter your marketing strategies to cater to each audience directly.
But once you sell your product to a retailer, there is no way of knowing exactly who buys that product. By selling directly to your consumers, you learn details about your customers that you can use to improve their future experiences with your company.
Are they older or younger? Male or female? Does one region of the country prefer one of your products to another?
Direct interactions help your company better understand its products and show you ways to improve them. Direct customer feedback enhances the product and boosts sales, creating more opportunities to increase brand loyalty.
What Are The Risks Of Direct To Consumer Marketing?
In every mode of business, there are always risks and gambles. Direct to consumer marketing has its risks and long-term benefits, too.
Supply Chain Issues
One of the upsides of selling to a retailer is consistency within the supply chain. The retailer quickly learns whether or not the product is selling and adjusts their purchasing accordingly. The consistency makes it easier to determine how much product you should manufacture and store.
With DTC marketing, finding the balance of how much stock to build up is a little more tricky. Sales can fluctuate wildly, and there are plenty of financial ramifications for building too much or having too few products on hand.
Additional Business Expertise Is Required
Successfully building a product and running the manufacturing process requires a particular level of expertise. But selling the product is an entirely different area altogether.
Building a brand, acquiring new customers, shipping directly to residencies, dealing with promotions, and the finances are issues that add to your plate.
These problems aren’t unmanageable as long as you have the right help, but it requires expanding the current business model to succeed.
Direct To Consumer Marketing Strategies
Direct to consumer marketing is constantly evolving, with new tactics and strategies created every day. Although this business model is more rewarding for product manufacturers and consumers alike, it has risks.
What might work today is unsuccessful tomorrow and completely obsolete by next month. So it’s essential to stay on top of the latest trends and pivot your marketing strategies when necessary.
Below are a few examples of solid direct to consumer marketing techniques.
Use Social Media
Social media easily links every person online with every other person. Instead of screen names and anonymity, most social media is real-life, everyday people who spend money and buy products.
Millions of potential customers spend several hours daily on Facebook, Twitter, Instagram, TikTok, and a few other platforms. A social media presence helps your company better understand its target audience’s demographics and humanizes your brand by directly interacting with the public.
Market Where Your Consumers Are
Spending money to put up a billboard for a snowboard store doesn’t make sense in the everglades of Florida. The same is true for online marketing. Once you know who your audience is, go wherever they are going and market there.
The idea here is to find out where your audience spends its time online and meet them there. To complete the analogy, you should put the billboard for snowboards in the mountains instead of a swamp.
Make Your Consumers Experience Unique
Make your product stand out by offering something unique. Advertisements and commercials are a great way to get a potential consumer’s interest, but the goal is to get their attention.
Using free trials, coupon codes, and personalized quizzes are a few ways to not only pique the interest of a consumer but help you understand your audience better.
Although there are a few risks with using DTC marketing, the overall business trends suggest it’s worth the potential downfalls.
More and more business models are eliminating the need for box store retailers.
It may be challenging to make the DTC marketing leap, but Ampla has a great network of partners who specialize in marketing practices. Reach out today to get more information.