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Direct marketing: New clout for ages-old tool of sales

DIRECT marketing is growing fast in Asia where personal relationships are highly valued and word-of-mouth is reassuring. From beer and garments to consumer goods and services, consumers like being wooed. Ralph Jennings goes door to door.

For hundreds of diners in Taiwan, 22-year-old Sheena Tsai is the billboard for Carlsberg, a Danish beer vying for a slice of Asia's competitive lager market.

The university student brings beer straight to tables at packed Taipei seafood restaurants with handy facts about Carlsberg's origin and flavor.

"Some don't know about it," says Tsai, who wears a beer-branded blouse to local seafood joints. "They like to meet sellers face to face. This kind of promotion is useful."

Carlsberg isn't the only one in Asia.

As major companies see growth potential in the region, many more are seeking a marketing strategy to suit it, giving new clout to the ages-old tool of bringing products directly to consumers.

Dozens of companies, from consumer goods maker Hindustan Unilever Ltd to delivery firms such as Fedex, are now using direct marketing methods to sell their products in increasingly competitive markets.

Direct marketing, broadly defined, covers any sales technique from pop-up stores and commercial gift bag giveaways to free sample handouts that puts sellers directly in touch with target customers, compared with indirect marketing such as advertising, product placement or sponsorships.

Asian consumers, long accustomed to doing business with trusted family or friends to avoid scams, see contact with direct marketers as safe avenues to get to study a product in a world of commercial uncertainty, experts say.

"People still reply to direct mail. They want to be marketed to," says Dominic Powers, Asia-Pacific senior vice president with marketing firm Epsilon International. "Relationships are very strong, more so than in America, and they get things done."

Every major firm active in Asia uses both direct and indirect marketing, with the direct portion growing.

Last year direct sales in Asia increased 5 percent to US$40 billion, up from a 0.4 percent increase in 2007, largely due to expanding markets such as China and India, according to data from market research firm Euromonitor International.

Big in Asia's direct marketing are alcoholic beverages such as Carlsberg and Glenmorangie Scotch whisky, Coca-Cola Co's Glaceau Vitamin Water, delivery firms such as Fedex with pre-existing address databases and common household goods sold by the likes of Amway.

Room for more

And there's still room for more.

Consumption and savings are expected to grow throughout Asia from a rate of 3.1 percent in 2002 to 4.6 percent next year, according to an HSBC Global Research report.

About 48 percent of the US$150.3 billion spent globally on direct marketing will go to Asia by 2012, according to estimates by the Grey Group marketing communications firm.

"Companies have to adapt to Asian situations," says Dibyo Haldar, a strategy analyst with marketing agency Euro RSCG Worldwide in Singapore. "Direct marketing as a percent of budgets is increasing. Everyone wants to try it out."

Direct marketing costs far less than mass advertising - and marketing officials say it gives them more bang for their buck.

The 300-member trade organization Sri Lanka Apparel has reached 100,000 people, spending only US$150,000, by joining online communities such as student activist groups with an interest in garments made in safe, legal working conditions.

The same outreach via conventional advertising would have cost at least US$20 million.

"We get a lot of bang out of our buck," says Sri Lanka Apparel global marketing chairman Kumar Mirchandani.

Amway Global, a major US-based direct marketing firm, saw 25 percent growth in China in 2008 and generated 30 percent of its worldwide business from the region.

"An Asian specialty is that personal relations are more emphasized. In the West, they think the Internet can solve all kinds of problems," says Shirley Chen, general manager of Amway Taiwan.

Dave Poh began selling Nu Skin products in 2005 after a friend in Singapore introduced them to him following a sale to that friend by another friend. He has recruited about 80 members in his new hometown, Taipei, largely by making friends with them.

Reaching out

Almost 70 percent of consumers in Bangladesh and Sri Lanka bought something in a door-to-door sale last year, says Steve Yi, chief strategy officer for the Grey Group in Seoul, South Korea.

And a once-obscure foreign cigarette brand gained 10 percent of South Korea's market share in 2002 by handing out samples to bar hostesses who then passed them on to clients, who eventually began buying the brand, Yi says.

Taking advantage of the popularity of door-to-door sales in India, 10 years ago Hindustan Unilever Ltd began a direct sales scheme in rural areas with populations of less than 2,000. About 100,000 villages are involved.

Some 45,000 women go door-to-door with Unilever hair oil, soap, shampoo and cream in baskets or cardboard cartons on bicycles. They bought Unilever inventory worth 4.5 billion rupees (US$94 million) in 2008, says Hemant Bakshi, an executive director.

A boom in electronic marketing is expected as Asian consumers adopt the latest technologies faster than peers elsewhere and welcome ads via mobile phone messages or online communities.

About 60 percent of Internet users in the Asia Pacific region have made purchases based on e-mail advertisements, compared with less than half in North America and just over 40 percent in Europe, Epislon has found.

By 2012, the Asia Pacific will lead other regions in mobile marketing spending at US$7.7 billion versus the global figure of US$16 billion, according to a study by ABI Research.

"Direct plus digital is growing, while conventional advertising is definitely not, in terms of budgets and activity," says Haldar of Euro RSCG.


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