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Exploiting New Niches for Direct Response Marketing

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I read an article recently in a housewares industry publication about a bidding process that has been established by major retailers called a reverse auction. The way it works is that suppliers are required to submit bids, typically online, and the lowest bidder gets to sell its product line to the retailer. This bidding practice has further squeezed the already thin profit margins realized by the suppliers.

If you think about it, this creates a great opportunity for the direct response industry. Household product suppliers that manufacture products suited for direct response should now be more open to marketing their products directly to consumers, in order to increase profit margins. And the proliferation of new cable television networks, such as HGTV and The Food Network, allows marketers to more precisely target their message to specific audiences.

Explaining the Latest Technologies

Another industry that could benefit from utilizing direct response advertising is technology. There are many new, high-tech gizmos being introduced that are confusing to consumers and, as a result, fail.

An infomercial is the perfect platform to explain how these new technologies work, how easy they are to use and how they can make your life easier and save you time and money. AOL, Windows 95 and TiVo all had varying degrees of success utilizing infomercials to introduce new technologies. And technology oriented audiences can now be effectively targeted through networks such as Tech TV and the Sci-Fi Channel.

Rehabilitating an Industry Under Siege

The accounting and CPA profession certainly need some help with its image in the wake of the Enron/Andersen fiasco. An infomercial could provide them with the opportunity to educate the public about how ethical the profession is and explain that the Enron/Andersen situation was an aberration. The National Rifle Association (NRA) employed a similar approach in its infomercial campaign. This target audience might be most effectively reached through more upscale networks, such as CNBC.

Another thing to keep in mind when seeking out new products or services to market through direct response is that retailers and products that target the high and low end of the marketplace are currently having the most success, according to a recent article in The Wall Street Journal . That's one of the reasons why Wal-Mart is now the largest company in the world. Value-oriented consumers who shop at Wal-Mart are also likely to purchase DRTV products that meet their needs and are effectively positioned.

There's still plenty of opportunity to further expand the direct response category through creatively exploiting potential new market niches. And
the media environment for direct response advertisers should remain favorable in the short term, since the general advertising market is not expected to rebound until 2004, creating more inventory for direct response advertisers.

Peter Koeppel is a Wharton MBA and president of Koeppel Direct, a direct response media-buying firm founded in 1995. He can be reached at ( 972) 732-6110 or via
E-mail at pkoeppel@ koeppelinc. com.

© Reprinted from Response Magazine, June 2002 AN ADVANSTAR PUBLICATION Printed in U. S. A.

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