Japanese DM Fears More Failures After Forbell Collapse,But Sees Bright Lights

Share this content:
TOKYO -- Japanese direct marketers are waiting for the other shoe to drop

following the bankruptcy last month of Forbell, a $115 million catalog company.

The concern is justified, given the fact that a growing number of catalogers are

facing a debt crisis. "We have to be careful about making sure that we deal with

the right cataloger these days," one vendor said.

The rising dollar isn't helping importers. Several overseas catalogers stopped

mailing into Japan last year, especially after the US currency passed the 130 yen


Even Lands' End with its established infrastructure in Japan is having problems

matching high growth rates of recent years. The company had to redo its forecast

for 1998 and revise it downward.

"The problem," Lands' End Japan president Gary Steuck said, "is in the

consumer's mind. People don't want to buy anything. They don't want to lose

anything. They only want to save money, which makes banks happy but not us."

"Everybody was shocked when Yamaichi Securities collapsed in November,"

Paul Hochberg, president of the Hawaii Direct Trading Company (HDTC) said.

"I wouldn't be surprised if people got nervous about investing here."

HDTC is a veteran of the Japanese market, having long done business with

Fujisankei Living Services and other major Japanese trading houses.

"We're seeing a slowdown and reversal of the international mail order business,"

Marc Fuoti, senior VP of McCann Direct in Tokyo, said.

"A lot of companies who came in after the business peaked in 1995 are pulling

out and retrenching because they are unable to enjoy the really profitable business

people promised them when they set up in Japan."

As a sales channel direct marketing "is getting pounded just as much as the retail

business. Profits are down and we're seeing some consolidation in the domestic

mail order market," Fuoti said.

Acton's Jonathan Lambert expects 300 lettershops in Japan to go bust in 1998.

"They've been severely stressed for years. In yen averages lettershop prices are

50 percent lower than they were four years ago."

Catalogers, Lambert said "will have to be more aggressive on pricing and

merchandising and offset lower prices through greater response."

He does think, however, that one or more big Japanese domestic direct marketer

will be on the auction block this year. "If the dollar hits 150 yen some major US

or European company, Otto for one, may go in and buy Nissan," a big player on

the domestic market.

But not everything is gloom and doom on the Japanese DM scene. Deregulation

of Japanese financial services later this year should give DM a solid shot in the


Fidelity Investment will set up a direct marketing business here with a new call

center. Apple Japan is pondering use of the Internet as another direct sales

channel. Last fall Dell sold $400,000 worth of computers on the Japanese web in

one day.

CUC Japan, a joint venture between CUC International and Mitsubishi, will

launch a membership program this spring together with the Fuji Bank, one of

Japan's largest, and will use a direct mail campaign to do so.

Citibank has reported a growing inflow of funds, especially in the now legal

foreign currency accounts. The bank plans to expand its Japanese call center

facility to handle new business.

Some US catalogers have persuaded Japanese consumers that their services,

systems and product quality is higher than Japanese companies, thus building

customer loyalty.

"We're seeing a strong shift in marketing philosophy to loyalty programs and

relationship marketing," Fuoti said. Even as ad budgets are being capped he has

seen more money flow into DM."

AMA's Seminar Business Booming In Mexico

Return to profitability after recession

By Thomas Weyr

MEXICO CITY -- The American Management Association dropped 2.4 million

brochures to the top 20 cities in Mexico in 1997, a year marketing director

Martha Zazueta called "incredible for us."

The peso crisis and subsequent deep recession in 1994-95 hurt the company's

business, she acknowledged. "We really had to pull out our best -- cut budgets

and clean our database -- just to survive."

One method was to expand seminar coverage from Mexico's top ten cities that

include Mexico City, Monterrey and Guadalajara to the "second" ten featuring

such towns as Pueblo.

That meant sending trainers out to smaller localities but the move boosted

business because companies did not have to pay extra to send personnel to the

larger cities for training sessions.

"We've been profitable for 20 months in a row now with one exception --

January -- but that's always slow and the economy doesn't pick up until the

second half of the month."

AMA offers 600 seminars in Mexico and markets all of them with the same mail

piece although each brochure mailed out contains only a dozen or so different


The company has a house file of around 100,000 with two thirds companies, the

rest individuals who have taken seminars in the past and are now repeating on

their own.

Some b-t-b lists are rented from brokers but rental within Mexico is often difficult

because owners won't allow deduplication.

"One of our major economic magazines won't allows its list out of the house. You

have to send the material and the envelopes to their office and they drop the

mailing off at the post office."

Zazueta said the list business is "improving slowly" so that renters willing to sign a

contract can take lists with them. But she prefers to rent Mexican lists from US

list companies. "We have a special agreement with Direct Media," a Greenwich,

CT-based company.

AMA does some off-the-page advertising in national newspapers like El Reforma

and used the English-language Mexico City News to promote special speakers

who come down from the US.

"We use telemarketing. We have a home page on the web. We are planning to

do something on radio next year and to e-mail our clients to keep them informed.

"E-mail makes up five percent of our total house file. It is still something brand

new in Mexico so most people don't have access to it."

In addition to public seminars the firm offers custom-made services to companies

who want individualized training sessions presented on site.

AMA has about 100 trainers on tap in Mexico. They are not on the payroll but

"work for us on a regular basis." The Mexico City office employs 30 full time to

manage marketing, programs, scheduling and registration.

Materials such as books, CD-Roms and videos come from AMA headquarters

in New York. Some are already in Spanish, others are translated locally. About

70 percent of the presentations are in Spanish, the rest in English.

Payment is by check, credit card, direct bank deposit (similar to the European

giro accounts) and cash. "People often decide to walk in the door and pay in


Cost depends on the seminar. One day seminars cost 1,740 pesos ($217.50, the

peso currently hovers around 8 to the dollar) with AMA members given 15

percent discounts.

On-site seminars and one-and-a-half day sessions run to 3,240 pesos; a full two

days cost 4,050. Night courses cost 2,000 pesos. A two week management

course, offered twice a year, runs to 12,000 pesos ($1,500).

Direct mail remains the basic selling tool with delivery reliable and relatively

speedy. In Mexico City bulk mail is delivered in from 48 to 72 hours. Mail to

other locations can take up to 10 days.

Bulk mail is substantially cheaper than first class -- 1.05 pesos for up to 20 grams

compared to 1.80 pesos. The post office offers extra discounts for mailers who

send out more than 1,000 pieces a month.

Self-improvement courses, Zazueta said, are a hot item in Mexico today, largely

thanks to creation of the North American Free Trade Area (NAFTA).

"Ever since NAFTA was adopted people realize they need better training and

better skills to succeed."

Sign up to our newsletters

Company of the Week

We recently were named B2B Magazine's Direct Marketing Agency of the Year, and with good reason: We make real, measureable, positive change happen for our clients. A full-service agency founded in 1974, Bader Rutter expertly helps you get the right message to the right audience at the right time through the right channels. As we engage our clients' audiences along their journey, direct marketing (email, direct mail, phone, SMS) and behavioral marketing (SEM, retargeting, contextual) channels deliver information relevant to the needs of each stage. We are experts at implementing and leveraging marketing technologies such as CRM and marketing automation in order to synchronize sales and marketing communications. Our team of architects and activators plan, execute, measure and adjust in real time to ensure the strategy is working as needed and change things if it's not.

Find out more here »

Career Center

Check out hundreds of exciting professional opportunities available on DMN's Career Center.  
Explore careers in digital marketing, sales, eCommerce, marketing communications, IT, data strategies, and much more. And don't forget to update your resume so employers can contact you privately about job opportunities.

>>Click Here

Relive the 2017 Marketing Hall of Femme

Click the image above