Businesses are always looking for new customers for their products. Regardless of whether the company manufactures a physical product for sale or if the company provides a specialized service, it still needs paying customers to stay in business. Direct marketing seeks to advertise the company to specifically targeted audiences.
General marketing campaigns, such as taking out radio advertisements or commercial time on television stations, seek to spread awareness of the company broadly across many different demographics. However, direct marketing campaigns advertise to specific customers. These can take the form of mailing catalogs or special offers to physical mailboxes, or emails to virtual ones. Directly marketing to individuals increases the likelihood that individuals will actually see the advertisements, and allows companies to advertise to specific individuals or companies.
Some products have universal appeal, such as toilet paper and toothpaste, and advertising to anyone will potentially increase the company's customer base. However, most products have the best chances for sales in very specific markets and demographics. For example, video games are purchased most frequently by males between the ages of 13 and 49. While this does not mean that people outside this demographic will never purchase a video game, it means that spending money to put advertisements directly in the hands of members of this demographic will result in more sales than money spent advertising to other demographics.
A number of psychological studies have shown that consumers are more likely to purchase products they are familiar with than similar products. One purpose of a company's direct marketing campaign is to increase its name recognition among a target demographic. Even if a specific piece of marketing to an individual doesn't result in the customer immediately buying a product, it builds a foundation for future purchases. A company can also use direct marketing to lay the groundwork for a cold call to that particular individual or business.
Businesses can use targeted marketing to advertise particular products to subsections of their customer base who are more likely to buy that product. Online stores will keep track of what items a particular customer will buy, and use those products to predict other products the customer is more likely to buy than other customers. In the case of an online book store, it could send out advertisements for a particular book only to customers the company predicts are likely to purchase the product.