PRICING IN PROPORTION - OVER-SIZED, OVERWEIGHT AND OVER HERE?

When Pricing in Proportion comes into effect next month, there will be winners and losers. The broadening of strict mailing weight restrictions will lift many of the current constraints, enabling cataloguers to review their product from the design, format and production elements, but for some it may be a case of simply paying more for their postage.

Most printing organisations, especially those with mailing facilities, are acutely aware of the cost of printing and mailing a catalogue, with postage often accounting for some 50 per cent of the total. Not surprisingly for an organisation that mails approximately 400 million items each year on behalf of its customers, the Polestar Group has been proactively briefing its customers on Pricing in Proportion for the last 18 months. In October 2005, some three months ahead of the Royal Mail, it mailed over 250 companies with its own self-explanatory, easy to follow guide on the new formats and their weight allowances. Further investment has been made in briefing the sales teams and customers, bringing marketing teams into the loop well ahead of the August deadline.

Neither of the new letter sizes (240 mm x 165 mm or 353 mm x 250 mm) are particularly print friendly, incurring significant wastage through the amount of trimming needed to reach the required size. However, companies such as The Owl Barn, which has been using the small letter size for about 12 months, believes that it is still a cost effective option. Managing Director Chris Astridge says: "Whilst our previous format, 240 mm square, would not have been suitable for the mail media format, our decision to move to what is the new small letter size was part of the overall development of our business when we were looking to increase our coverage and circulation. However, with some of our catalogues now at 64 pages but coming in at just under the 100 g threshold, we are able to offset any wastage against the significant savings in production and distribution. As we understand it, by using the short cut-off presses at Polestar Chantry*, the wastage is somewhat reduced compared to the more conventional size machines."

Those retaining their A4-sized catalogues will also have the opportunity to increase their pagination or improved the quality of the paper, with a new threshold of 250 g. Other organisations have been looking at the A5 option. In this highly competitive market, the design and content of a catalogue has had to be weighed against the production and distribution costs, a balance that has often been difficult to accommodate. The introduction of pricing in proportion has very much changed the way cataloguers can now look at their product, but this time coming down on the creative side.

But it is not a win-win situation for everyone. Although 70 per cent of business mail will be unaffected by the changes, those whose catalogues currently reside under the 60 g allowance will suffer an increase in mailing costs. If they are to retain some kind of parity with their current prices, they will need to consider a change of size or an increase in pagination. For many, a catalogue of between eight- and 32-pages is sufficient to meet their sales and communications objectives. Increasing the pagination is not necessarily a step they wish to take.

Nick Begy, Sales & Marketing Director of M and M Direct, concurs with this, warning against the danger of increasing pagination for increasing sake. He says: "The selection of poor products just to fill extra pages will only dilute sales and may result in a negative impact rather than a positive one. From the design side, it may be better to take advantage of more space per product and increase the photography or sales copy accordingly. Alternatively, there is an opportunity to include a sales letter or a carefully selected third party insert, which would not increase postage but contribute to the production costs. In this respect, Pricing in Proportion is one of the greatest leaps forward for mail order for many years but it is important to keep your own business model in mind before making any rash moves."

Other areas for cataloguers to consider are alternatives to the Royal Mail for distribution, as new entrants secure their places in the market. Some movement towards the likes of TNT, DHL and UK Mail is already being seen, as these new carriers offer 2-3 day guaranteed services. Northern Tool + Equipment uses both TNT and Royal Mail depending on the weight of each catalogue, but is full of praise for the TNT service. Padraig Timmins, Direct Marketing Manager, says: "We moved to TNT for the distribution of our smaller catalogues, which come in around the 100 g mark. TNT is not only very competitive for this size and weight but also beats the Royal Mail on delivery by two days. However, Royal Mail is better for larger catalogues, so at the moment, we are getting the best of both. Whether we continue to use TNT will depend on their response to P-I-P in terms of their cost structure."

Northern Tool + Equipment has no plans at the moment to change its catalogues sizes from A4, A5 and Delta, and although Padraig Timmins describes the new P-I-P sizes as 'impractical and uneconomical at this time', he believes that the new small letter size may become the new A5 given enough support from the printing industry. He adds: "It certainly stands out at the moment, but if everyone goes down this route, it will lose a certain cachet. We are happy with our sizes and will look to gain advantages from the increased weight allowances."

ENDS