In the summer of 1998, Campaign magazine announced that marketing executives at Heinz had withdrawn its direct marketing magazine in 1998 after deciding the Heinz brand communicated itself more readily through television and poster advertising.
Campaign reported that Heinz believed its products would sell without the use of direct marketing and would revert to TV brand building.
Campaign, a magazine that champions brand building and advertising, suggested the following reason for the failure of the Heinz At Home project. Tylee (1998)
reported:
Want to know why Heinz is axing its customer magazine, At Home? Then try this simple test. Put your thumb across the Heinz logo on the front cover. Now imagine another name in its place.
Sainsbury’s, Asda or Safeway perhaps. Does the magazine look a neat fit with any of those brands?
If your answer is yes, you are some way to understanding why Heinz At Home has bitten the dust.
Tylee suggested that, while the Heinz brand oozes warmth and homely values, the magazine had struggled to sustain them, being instead a mere bolt‑on to the brand’s distinctive multi-million pound TV advertising. Damningly, Campaign said that the move ‘almost certainly ends Heinz’s four-year flirtation with direct marketing’.
It had all started so well. . .
The announcement in May 1994 that Heinz was switching emphasis to an extensive direct marketing programme and dropping all product advertising in favour of ‘umbrella’ TV branding was much hyped at the time. It was probably the case that Heinz brought in direct marketing as an extra weapon in its armoury to match the growing power of the major retailers.
Heinz had some experience of direct marketing from its US operation and a strong baby foods division that used direct marketing. A central plank of the initiative was Heinz At Home magazine, which was to be sent to customers responding to promotions: in‑store campaigns, on‑pack vouchers and so on. The aim was to gather customer data on an ongoing basis using the data gathered from vouchers redeemed in‑store. This would help Heinz identify its most valuable customers, profile attractive prospects, target up‑selling and cross-selling opportunities precisely, and improve loyalty to Heinz through the brand building values of At Home magazine.
Early results looked impressive. . .
Richards (1995) reported that of the 3. 5 million households that were mailed the first magazine in September 1994:
● 68 per cent spontaneously recalled having received it;
● 40 per cent said they would keep it for future reference.
The number that actually took up the magazine’s coupon offers or contacted its helpline was an impressive 1. 5 million households. But did the activity actually result in increased sales? Heinz claims that in October 1994, a month after the first magazine went out, its soups’ share increased 6. 4 per cent on the month. Tomato ketchup was up 7. 7 per cent and pasta meals rose by 4. 9 per cent.
According to Booth (1998), by 1996 the agency had taken the scheme from a simple magazine to a highly targeted and segmented approach to customers. It whittled down the base to those customers who were genuinely responsive, and Heinz seemed happy with the return on investment the approach generated. So why did Heinz withdraw the programme? Campaign offered its own analysis: You can see the point of a supermarket launching a magazine because it has so many products to talk to its customers about’, an agency chief who has worked on Heinz business points out. ‘But Heinz makes tinned foods. There’s a limit to the amount of new information it can offer – and who is bloody interested anyway?
Some commentators felt that this was an example of the customer magazine being overused as a tool.
However, as Campaign suggested, for the right advertiser with the right product, a customer magazine is a fantastic marketing tool. Some examples of successful magazines include the AA, British Airways’ High Life, Saab magazine, and in‑house magazines from Tesco and Sainsbury.
One possibility is that customers get too many and suffer from magazine overload. Campaign again:
Broadly speaking, a middle-class family in the UK could find itself in receipt of titles for at least one car brand, a building society, a bank, Sky’s listings magazine, a supermarket, a holiday company and so on. With that kind of volume it isn’t long before receiving a customer magazine stops being a bonus and becomes a chore (or a bore).

Booth (1998) quotes another agency director:
‘Putting a [postage] stamp on communications to sell a 30p can of beans does not make sense.’ If one estimates the net margins on a Heinz product as about 3p per item, there is no doubt the economics of direct marketing need to be worked out carefully for FMCG. Adding to the difficulty would be the hard work that had to go into data gathering. Customer transactions could only be recorded by Heinz using redeemed vouchers.
Ironically, the supermarkets probably knew more about Heinz customers than Heinz did.
Was the magazine good enough? Tylee (1998) was sceptical:
If ‘Beans on toast with a twist’ and ‘Have a pizza romance’ (and let’s shoot whoever came up with that pun) are the two best features they can come up with, then killing off the magazine was undoubtedly a humanitarian gesture.

Questions

1. Why did Heinz UK decide to pull out of its direct marketing approach?

2. What are the key features of FMCG markets that make it so difficult for database and direct marketing to thrive?

3. Produce a cost/ benefit analysis for Heinz At Home, estimating the costs of the campaign from the material in the case study and the revenue benefits. Revenues were based on increased cross-selling of different goods.
Assume typical margins were about 3–5p per product. Your calculation should also include revenues accrued from incremental loyalty gains: as a result of the programme, a certain percentage of customers chose Heinz rather than competitors.

4. Comment on the use of direct mail to promote fast-moving consumer goods. Outline the advantages and disadvantages versus its media competitors.

5. What do you think the major role of direct marketing is in FMCG markets?