DTC – Direct to Consumer Marketing

The US domestic market for consumer goods and services is very dynamic. For example, what is state of the art in terms of technology may change, competitors may enter the market, or profit margins may decline. As you may have already noted, this category is home to some of the most interesting trends in product development.

Evidence of the dynamism of the US domestic consumer goods market is seen in the disruptive effects of digital technology that permits firms to engage in Direct to Consumer (DTC) marketing.

 Technology permits firms to circumvent established channels of distribution to market directly to consumers without a distribution intermediary. A distribution intermediary is a firm that assists with distribution of a product, such as a retailer or an ecommerce site (see Figure 1 below).

n For example, Tesla, the world leader in electric vehicles sells cars through its internet site directly to consumers without using the established franchised dealer network model. While potential buyers are able to see and test drive vehicles at company owned stores, the role of the traditional dealer who manages sales, customer relationships, warrantee service and other customer related roles has been eliminated. The result is a more efficient and direct sales channel that permits the Tesla to be in complete control with its relationship with its customers.

Many other firms have adopted a similar approach and now maintain websites that permit them to market directly to consumers. Industries such as winemaking, spirits, gourmet foods etc.. now offer digital store front that permit them to market directly to consumers and avoid the expense of unwanted distribution intermediaries. Direct to Consumer marketing has become a key part of an Omni Channel Distribution strategy.

This has created marketing challenges for such firms. As they seek to invest in this increasing profitable marketing model, important questions need to be answered. Specifically, they need to understand how to optimize the digital shopper experience and turn Direct to Consumer marketing into a profitable sales channel.

In your group, choose a product market (not a brand) that interests you to serve as the basis for your project. For example, the correct level of analysis would be something like gourmet cheese, automobiles, wine, etc…. that is, a product market in which a number of brands are represented. Please note that marketers like Amazon, Alibaba, Walmart.com are distribution intermediaries and not DTC marketers. 

You should be able to research your chosen product market thoroughly both through primary and secondary sources of market research information. Suggested forms of primary research include observational research, survey research, or focus group interviews among others. Secondary sources include trade publications, annual reports, business publication, commercial information sources and other widely available forms of information. 

Work Product:

When you have completed your project, you will submit a well- integrated, well-conceived, well-written document developed from a third-party perspective, i.e. that of a consultant. It will include the following:

Executive summary:

A comprehensive summary of your research outcomes and how they impact strategy and key programmatic approaches to Direct to Consumer marketing in the product market you and your group has chosen (no more than 800 words).

Current Strategic Analysis: 

The current state of Direct to Consumer marketing in your chosen product market should be analyzed in a summary of the current market conditions. That is, what are successful DTC marketers are doing well in the product market you’ve chosen? What are their current strategies? That is, what are the market and customer characteristics targeted and the strengths and weakness of the current approach as well as the various environmental factors that are present in the selected market. In particular, consider the dynamic nature of the environment, the drivers and resisters that can impact effective targeting and positioning. What are the latest innovations in DTC marketing? Clearly, a level of detail consistent with your desire to justify your conclusions is required as is the extensive use of secondary market research data. Sources of this data include trade associations, corporate annual reports, market research studies, etc…

Customer Research

Intimate knowledge of the customer is required by every marketing firm and evidence-based decision-making is key to good marketing decisions. Accordingly, conduct an original research study using primary research sufficient to build the customer knowledge essential to understand the targeted customers and their characteristics. That is, it should have sufficient statistical power to permit you to make assertions about the consumer attitudes, preferences etc… that you find. To understand customers better, you could create an electronic survey, for example using Qualtrics, send via social media or email, and analyze the results in Excel or another statistical program. You could also conduct focus group or consumer interviews to explore customer thinking about your product and write this up.

Key questions to ask may include: what attracts consumers to Direct to Consumer marketing approaches? What do consumers want in a website? Qualtrics has a number of research scales (questions) that you can use to build your survey. Then, prepare a summary research report detailing your findings regarding the consumer’s perspective on your research question. You should describe the methods used to research your market, the results of your research process, a discussion of your findings and a conclusion. Your conclusion should answer all questions about how to market directly to consumers.

Market Analysis

Based on your customer research and the competitive intelligence developed in your strategic analysis, briefly summarize the major problems and opportunities inherent in a Direct to Consumer approach in your chosen market, such as the relative positioning and strength of competitors, potential and anticipated competitive reactions, cannibalization and other strategic marketing issues.

Your Market Analysis section will address the current market intelligence which you have collected in rigorous research process and also translate the data from your Customer Research into actionable opportunities. What is the future of Direct to Consumer Marketing? How will MARTECH influence DTC marketing approaches How are company websites evolving? What creates an engaging Direct to Consumer experience? Support your observations both qualitatively and quantitatively.

Strategic Implications/Recommendations:

You will prepare a set of Best Practices - strategic “must haves or must dos” as a result of the research you conduct.

What is your recommendation to firms considering DTC marketing channels? How do you suggest they take advantage of the potential opportunities you have identified? That is, what are the must dos and must haves? How should firms craft the ultimate DTC customer experience? How should firms measure success in terms of their DTC marketing efforts? For example, what website ordering features result in the highest per order sales?

This section should include your justification and support for your conclusions, and key elements of forward looking strategy (promotions, brand messaging, creative strategy ) required to implement the recommendations you suggest