Speech By Mr Lim Hng Kiang, Minister For Health And Second Minister For Finance, At The Direct Marketing Asia 2002 Conference On Wednesday, 31 July 2002, 9.20 am At Ballroom 3, Suntec Singapore International Convention And Exhibition Centre31 Jul 2002
Mr Robert Edwards, President of the International Federation of Direct Marketing Associations,
Asia Pacific Direct Marketing Association Leaders,
Ladies and Gentlemen,
I am happy to join you today for the opening of the 5th Direct Marketing Asia Conference.
2. In the words of the organisers, you are here over the next two days to "plunder the minds" of the marketing experts who have been assembled for this conference. Your gathering here is timely. In an increasingly crowded market place, finding innovative and effective ways to reach out to customers and to gain mind share is a challenge that all companies face.
Potential in Direct Marketing
3. Among the many issues that you would discuss, I am sure you would bring your minds to bear on how to derive the most out of targeted databased marketing.
4. In the US, a recent survey showed that two-thirds of the executives currently invested less than 40% of their marketing budget on targeted, database-driven activities, such as direct mail and telemarketing. About one-third of the executives invested less than 10% of their marketing budget on database-driven activities.
5. However, more than half of the executives indicated that they should invest more heavily in database-driven campaigns over the next 12 months. In contrast, only a fifth of them said that they should invest more heavily in broad-based campaigns, such as advertisements, trade shows and public relations.
6. According to the report, the wide emphasis on database-driven campaigns was due partly to the increased scrutiny on corporate wastage, and the need to improve efficiency. It was also a result of some of the more visible success stories in corporate marketing, in which substantial increases in market share and profitability have been attributed to clever uses of database-driven marketing, including e-marketing and direct mail.
7. A local study commissioned by the Direct Marketing Association of Singapore, carried out last year, revealed similar results. Companies surveyed rated email and direct mail catalogues as the most effective channels for generating sales. On the consumer end, almost half of the Singaporeans surveyed said that they have purchased from direct mail catalogues.
Towards Effective Direct Marketing
8. It is clear that there is potential to be tapped in direct marketing. The question is, how do we go about it most effectively? It is a question which throws up a wide range of issues. Let me draw your attention to three areas.
9. First, cultural and societal differences. With over half of the world's population and seven out of the ten most populated countries in Asia, it is easy to see why there is much excitement about the region's marketing potential. We should not however, lose sight of the fact that Asia is made up of culturally diverse and economically disparate regions. What is an effective marketing strategy in one culture or society, may not work well in another. For example, Singapore and Malaysia are neighbouring countries, but I understand from some members of the direct sales industry that consumers react differently in Malaysia and Singapore. Consumers in Malaysia prefer a more casual, informal marketing approach, while consumers in Singapore prefer more formal presentations and short meetings.
10. Second, harnessing technological innovation. Advancements in infocomms technology and the proliferation of the internet and handphones provide exciting new opportunities for direct marketing. New marketing mediums, such as email and SMS, give companies cheap and easy access to a large base of customers. For example, in 2001, in the United States alone, there were approximately 100 million e-mail users with over 1 billion messages sent daily. Its direct nature and low cost led to an avalanche of direct marketing activities through email. It was reported in the Business Times recently that China is now the third largest Internet user in the world, with over 45 million people logging on. This is an increase of 72% compared to last year's figures. With one of the fastest growth in Internet penetration rates in the world, Asia offers rich opportunities for direct marketing through cyberspace.
11. However, users of these new technologies need to take into account consumer unease over intrusions into privacy, as well as consumer behaviour. What appears to be novel use of technology for direct marketing may fail if it does not adequately take into account the concerns and behaviour of consumers.
12. We should also consider how the new technological media can be integrated with existing technological as well as physical media to create a cohesive marketing strategy. In his article Strategy and the Internet, Michael Porter made the following observation: "The established companies that will be most successful will be those that use Internet technology to make traditional activities better and those that find and implement new combinations of virtual and physical activities that were not previously possible."
13. For Direct Marketing, a further challenge is this: how do you integrate the new technologies into your marketing campaigns while retaining the human touch? A key traditional strength of Direct Marketing is its more personal and customised approach. Successfully marrying high tech with high touch will be key to the future of Direct Marketing.
14. The third area is strengthening consumer confidence. Consumers are generally more sceptical towards Direct Marketing and Sales, partly due to incidents of abuse and harassment by unscrupulous operators from time to time. It is therefore important to raise the confidence and win the trust of consumers for Direct Marketing to be more effective.
15. In this respect, I am glad that the Direct Marketing Association of Singapore has introduced a Code of Practice. This is a commendable effort at self-regulation, which helps assure consumers of the behaviour standards that they can expect. Having formulated the Code, it is important for the DMAS to ensure that its members abide by it, and to keep the Code up to date with new technology and marketing practices. I know that the DMAS has been working hard in these areas, and I am confident that it will be successful in its efforts.
16. Let me also touch on multi-level marketing and its role in direct marketing. Singapore has enhanced its legislation framework by revising the Exclusion Order of the Multi-Level Marketing and Pyramid Selling (Prohibition) Act. The new Exclusion Order, which took effect this year, provides checks on misleading behaviour and safeguards for consumers, such as entitlement to full refunds within 60 days of distribution of the goods. The purpose is to enhance consumer protection, while allowing legitimate businesses to operate multi-level marketing schemes. This will provide greater market certainty, and give businesses an additional avenue to market their products and reach out to consumers. It will also give businesses greater clarity and confidence to embark on innovative forms of direct marking without worrying about pyramid selling infringements.
17. There is tremendous potential in direct marking. To get to the pot of gold however, a number of issues must be first addressed. I have highlighted 3 broad ones: cultural and societal differences, harnessing of technological innovation and strengthening consumer confidence. You have before you a full and comprehensive conference programme. This is a valuable opportunity for you to exchange views and to pick each other's brains on the important challenges ahead. I wish all of you a fruitful conference.