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Consumer Affairs
Friday, February 1, 2008
Postal steak

This is how you price yourself out of the market – and it takes a genius to do this who has a monopoly: you simply increase prices relentlessly way above the rate of inflation. Consumers get pushed into a corner, and they start to lose the habit. In a contrarian way the post office commenced its re-pricing strategy about the time that facsimile machines became widely accepted as a convenient way to waste enormous amounts of paper. Why post something by snail mail when you can deliver it almost instantly, or better still overnight so that the hapless recipient can’t stop the stuff pouring out onto the floor?

Pleased with its strategy the post office continued apace, encouraging even more consumers to accept the nascent internet services. A wider audience found they could send ‘emails’ – more spontaneous than a fax, cheaper, and just as fast. Telkom started to lose out because of its exorbitant international fees; now you could send an email to anywhere in the world for next to nothing.
Back with the post office. It was about ten years ago we used to receive around 350 mail items a month. We thought nothing of posting a 100 or so Christmas cards, for instance. This last Christmas I think we sent five.
Similar challenges have faced us marketing Insurance Times & Investments. This was highlighted by a recent international application for a subscription. The airmail postage for an A4 envelope (puzzlingly referred to as a B4 for some reason) is now R20.10 – even then that’s only to countries in Southern Africa – and provided the weight of the item does not exceed 300 grammes. If it does then prepare for a charge of R11,29 per 100 grammes; or R112,90 per kg. Prime fillet costs around R75 a kg.
Since I get far more fun out of eating steak than sticking a stamp on an envelope (the taste of the glue is awful anyway), why on earth would I want to pay double to mail an item overseas? Indeed, why would a subscriber want to pay so much to receive our magazine? We might like our product, but we are not that arrogant. Gone are the subscribers we used to have in New York, Washington, Paris, Geneva, Paris and London.
Now we have an Internet site and are working out the best way to email the magazine. Instead of around R20 an item it will cost about R0.000000000001 of a cent. The only trouble here is that people still like to read paper: something to hold, and fold, and burn if you’re cold. It is difficult to underline or scribble on a computer screen, or carry the monitor out onto a sunny patio when you are having a coffee. So paper still works best, and I can’t see every subscriber happy to print a magazine out in their office; it would be too expensive.
I could also have entitled this little note, ‘What’s the beef?’ By Nigel Benetton

Copyright © Insurance Times and Investments® Vol:21.1 1st February, 2008
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