Global-A Victory for Direct Marketing in Germany (645 words)
This January, the German government announced its plans to scrap two laws that have been thorns in the side for direct marketers doing business in Germany. Enacted in the protectionist era of the 1930s, the first law limited companies from offering consumers discounts of more than 3 percent. The second piece of legislation, which has attracted a good deal of press coverage in the past few years, was its bonus gift act. This law forbade any free giveaway of significant value with a purchase. U.S. cataloger Lands' End was most notably affected by this piece of legislation.
Following the launch of the cataloger's German subsidiary in 1996, a local retail trade association claimed its famed unconditional guarantee was free and had value, and as such, was in violation of the bonus gift act. During the next few years, Lands' End battled its way through the German courts. After winning the initial ruling, the cataloger lost—on appeal—its right to advertise its unconditional guarantee within Germany. Although it has discontinued advertising its guarantee, the cataloger continues to honor it.
With the explosion of e-commerce, these antiquated laws now are perceived as threats to German competition. As such, the government plans to remove the Nazi-era legislation from its books come May.
According to Sam Taylor, Lands' End's vice president of international, neither the ruling nor the high profile court proceedings have hurt business. Instead, it has increased brand awareness to the extent that it is a better-known brand in Germany than it is within the United Kingdom, which is home to the cataloger's first global subsidiary. What's more, Lands' End's business in Germany has enjoyed continued growth, year after year, and is the cataloger's largest business in Europe.
Following the repeal of the bonus gift act, Lands' End hopes to advertise its guarantee in Germany as early as this summer.
Co-op in the United Kingdom
A familiar blue envelope has made its way to the United Kingdom. Hoping to achieve the same brand recognition it enjoys in the United States, Cox Target Media is testing its first overseas Val-Pak mailing.
For the U.K. launch, Cox tweaked the successful domestic cooperative direct mail program rather than re-invent it. As such, the U.K. Val-Pak program mirrors the U.S. program in all but a few ways. For example:
• The U.K. co-op is sent unaddressed to post code subsectors using Royal Mail's door-to-door service.
• The outer envelope, which uses the brand image of its U.S. counterpart, has been slightly altered for a British audience: "U.K." has been added to the Val-Pak logo and the symbol for the pound sterling appears in lieu of the dollar sign.
To select the geographic area most desirable for its test mailings, the marketer identified post codes with high concentrations of its target audience: households with high levels of disposable income that allow numerous lifestyle choices. The geographic and demographic data was overlaid with the geographic data of small, local businesses. Following analysis of the data, Yorkshire was selected as a test community.
According to Cox commercial manager Carmel Keddy, who heads up the U.K. Val-Pak program, consumer response to the initial test mailing in Yorkshire has been good, with the best and simplest offers generating the most response.
To measure response, Cox relies on reporting from participating businesses, which have been encouraged to count the number of vouchers redeemed. The co-op mailer also is running contests and including entry forms within the pack; it is tracking the entries to see where it is pulling the most response.
The mailer also is conducting a household survey by phone. Approximately 320 of the 30,000 households that received the Val-Pak mailing were phoned. More than 90 percent of the households that recalled receiving the pack admitted to having opened the envelope. Ten percent of these households indicated they intended to use a voucher from the mailing.