Microcomputer marketing: act III. (direct-mail advertising)

MICROCOMPUTER MARKETING: ACT III

A severe slowdown rocked the microcomputer industry in 1986. Inventories were up, sales were down, operating expenses in every phase of the business were rising and the outlook was grim. The shakeout that ensued was devastating for many companies, yet for the survivors it gave birth to new selling strategies, one of those being the adoption of direct marketing concepts, namely serious database building, in the battle for corporate survival and the struggle for growth.

Prior to the shakeout, general advertising was primary and retail shops were the primary means of distribution, but rampant discounting, the high cost of bringing a product to market and getting shelf space posed problems for microcomputer hardware and software vendors. New circumstances required new strategies and mail order was to emerge not only as an independent, alternative channel, but as a way to bolster the sale of microcomputer products in the retail market.

The partnership between the microcomputer and direct marketing services industry has proved to be a powerful combination. Both have made significant contributions to the other's cause and learned from each other as well.

Software developer Borland International -- certainly in the top 10 of microcomputer software developers -- engineered a direct mail campaign in 1989 to encourage users to trade in their copies of Lotus 1-2-3 for Borland's new spreadsheet software called Quattro.

"We couldn't really compete with Lotus when it came to numbers of salesmen, but by using direct mail it allowed us to compete with them on a different ground, the mailbox -- and reach a large base of users," said Mark Randolph, director of direct marketing.

According to Randolph, more than 300,000 copies of Quattro were sold in this direct mail campaign.

Mail order was not new to Borland. In fact, Philippe Kahn, Borland's founder, began his company by selling his software via direct response advertising in mail and media in 1983. "It wasn't by choice," tells Randolph, "the major distributors were not willing to take a chance on a start-up entrepreneur with just another good idea."

Until the slowdown, the combination of advertising and editorial had been very effective in creating walk-in traffic for retailers, called "pull-through." Further, industry providers were reluctant to use alternative channels because they did not want to antagonize their major distribution channel, the retail store. The microcomputer community was a retail animal. The "impersonal computer" had to be "personalized," and that could only be done "face to face." Despite the lack of knowledgeable sales-people, both hardware and software vendors felt that face-to-face contact was a vital ingredient, and the retail channel was the only way to get it.

But there were others in the market who had different ideas about what the community of micro users needed. Some of them came from the publishing industry and carried over a concept that had been very successful in the photography and electronics markets -- mail order. The companies that were the original catalogers in the micro hardware field emerged from the "older" technical arena of photography. …

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