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CHART No. 1

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SURVEYS SHOW ABOUT 9 out of 10
HOUSEWIVES LIKE TO RECEIVE
AND USE MAILED SAMPLES

A second fact, illustrated by Chart No. 2, is the importance of new products to the national economy. Over half of the products available to consumers in supermarkets today were not available 10 years ago and mailed merchandise sampling is far-and-away the most effective vehicle available for the introduction of these new products to

consumers.

New products are vital to continued economic growth. Actually, 55 percent of products found in supermarkets today were not available 10 years ago. And mailed sampling is vital to the introduction of many

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new products. The sample to the housewife, assuming the product is satisfactory, sets up the visit of the housewife to the supermarket. With this background, those who promote their new products by distributing samples through the mail are concerned with any intention to change the postage rates for such samples without regard to true handling costs, or to revise preparation or handling requirements that would make distribution so impractical as to deny this new product exposure "cost free" to the American housewife. But, let me state very clearly, no one interested in this type of mail is expecting his promotion expense to be subsidized by the taxpayer.

If we could emphasize any single major premise this morning, it is the fact that manufacturers are not requesting, do not expect, and are not agitating for preferential consideration in postal rates for these samples. They do expect to fully pay their way.

However, we must keep the "problem" in perspective. To do this it is necessary to know the approximate annual volumes of such mailings, and the Post Office costs for their handling. Until now, neither of these important facts have been available.

For example, past Department comment has suggested a wide range of figures for the annual volume of mailed merchandise samples. Numbers in the billions have been quoted. Most recently, during an industry/POD meeting, a member of the Department commented that there are approximately 600 million "small packages and parcels” mailed annually.

This category would include, however, not only the merchandise samples we are discussing, but also a broad variety of other mailings, such as general merchandise, premium requests, et cetera. Since the needed figure on volume was not available, we have contacted the four largest national mailing companies, who handle the great proportion of these merchandise sample mailings. Averaged over the past 3 years, these four companies processed a total of approximately 145 million samples annually. Adding an extravagant allowance for limited activity by smaller mailing agencies, the total must be considerably less than 250 million such samples each year. Our Chart No. 3 illustrates the relation of this mailing volume to other mail totals.

The total number of pieces handled by the Post Office is on the order of 80 billion pieces. The entire group of third-class mail, about a quarter of that, is on the order of 20 billion pieces.

Small packages and parcels in total, are estimated by a Department spokesman at about 600 million. Our figures, derived from mailinghouse information, with an extravagant, exorbitant increase to represent any other possible input to the system, are estimated at 250 million.

I might mention these are slightly out of scale. These are a little larger than they should be. The artist chose to do that in order that they would photograph. This bar-250 million-should be oneeightieth of the size of this bar-20 billion.

(Indicating on display.)

Mr. OLSEN. When you say this, you are indicating the bar showing 250 million should be one-eighth the size of the 20-billion bar?

Mr. GERTZ. One-eightieth. It would almost fade into the bottom here, but in order to photograph, it is a little large.

A related problem is that of determining the average weight of these merchandise samples. Are they principally of minimum weight (less than 2.6 ounces), so that the current postage would be 3.6 cents per piece, or are they considerably heavier, so that the postage would be substantially more than the minimum? During the same inquiry to the major mailing houses, we determined that, based on the past 3-year mailings, the average merchandise sample, of the type we are discussing, weighed just under 5 ounces. This would require postage of a little less than 7 cents a piece.

Five ounces, actually is 67% cents.

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Chart No. 4 illustrates these findings. The average merchandise sample mailed broadly-and once again we are talking about saturationtype consumer samplings, in cartons, not in envelopes-which is properly 5 ounces, not 1 or 2 ounces. And they pay postage of about 7 cents each; not the 3.6 cent minimum, but about 7 cents.

With this information as background, and with handling costs unavailable from the POD, an industry group attacked the problem of determining Department costs for handling the average merchandise sample. Working from a variety of published information, and many

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