Susanne Hornikel explores the direct marketing industry in the Czech Republic.

The Czech Republic is well known for its wonderful landscape and cultural and historical memorials. It boasts numerous world famous monuments from different eras, as well as 19th century musicians such as Bedřich Smetana and Antonín Dvořák and literary giants Franz Kafka and Milan Kundera. 

Despite the global economic crisis, the conservative Czech financial system has remained relatively healthy and purchasing power in the 

Czech Republic has been growing for years. Compared to other states within central and eastern Europe, the Czech Republic is one of the most stable and prosperous of the post-communist regions. Maintaining an open investment climate has been a key element in its transition to a functioning market economy. A member of the European Union, the Czech Republic has an advantageous location in the centre of Europe, a relatively low-cost structure and a well-qualified labour force. So, it’s an attractive destination for foreign investment and this potential should be noted by companies entering the Czech market – which is particularly progressing in terms of direct marketing.

Address potential and quality

The Czech market has a long tradition of direct marketing. In particular, in the B2B sector, personalised mailings are common and therefore providers offer a good variety of database addresses and services. But while the B2B sector offers a high quality of addresses, B2C addressing for marketing campaigns is less advanced. Response lists are still in development and rather limited due to the strict data protection law, but there are database addresses available on the Czech B2C market where general criteria like gender, age, purchase power and also geographic data is selectable. 

To overcome the shortage of supply, some mail order companies also use non-personalised mailings for new customer acquisition.Leading providers of lists and databases in the Czech Republic are the Creditinfo, Coface, D&B and the Schober Information Group. 

Data protection

The data protection law is tight in the Czech Republic, since it is viewed as an essential human right. Therefore, under Act No 101/2000, the law requires the agreement of every person before their sensitive data can be processed. Consent by telephone or Internet is sufficient for name and address details, but if more sensitive data is used, consent must be given in written form. Furthermore, the possibility of an opt-out should be considered as mandatory for B2C mailings. The opt-out principle is confirmed simply by checking a box on the mail response.

Compliance with this law is monitored by the Data Protection Office for Personal Data Protection (UOOU). 

The official Robinson List, where people can register if they do not want to receive any advertising via post, is managed by the Czech Association of Direct Marketing, ADMAZ. But many companies do not use this Robinson List because it contains quite a small amount of addresses – instead, most companies maintain and use their own internal lists.

Mailings

Traditional direct marketing, promotion and print advertising are the channels deemed most acceptable by the Czech people although mobile and email marketing, online shopping and interactive marketing are developing rapidly. 

However, experience and know-how in these latter fields are less sophisticated and therefore online direct marketing is not yet able to replace offline marketing. Mobile marketing is following just behind personalised mailings and the number of Internet users and orders via the Internet are growing steadily, although as yet the main products bought online are electronic goods, books and travel tickets. 

Consumer attitudes

Taking into account the character of Czech customers and their likes and dislikes concerning advertising, the nature of online or offline advertising should be informative, cost-oriented and hard-selling: Czech consumers are price-conscious, critical, conservative and rather rational. 

I would also recommend that only credible products are offered in order to gain the trust of these clients. The Czechs have great respect for titles and their exigence concerning politeness is comparable to Austria.

Mailings should – to meet the requirements of the Czech consumers – focus on content, entertainment and attractive offers rather than purely on creative, high quality presentation. Brand awareness is important and companies with a good reputation will be more easily received than others.

Nevertheless, for the Czechs, attractive pricing plays a larger role than quality – the product must be affordable to interest this customer. As far as response options are concerned, reply cards are very popular with the Czechs.

Sales promotion

Sweepstakes, prize draws, gifts and discounts are also favoured in the Czech Republic. For consumer lotteries and prize draws linked with an order, certain bodies must be notified, such as tax authorities. If companies use discounts or special sales in their advertising, terms and conditions have to be absolutely clear and must not be at all misleading.

Mail order business

The financial crisis did not pass the Czech Republic without impact, but the blows were not as hard as in many other European countries. Some of the big European mail order companies remain dominant in the Czech market: Otto, Quelle, Neckermann, Reader’s Digest and, since  2009, Witt International. Also, Klingel has intensified its activities there. 

But mail order companies have had to face different challenges: Quelle and Neckermann lost 35 per cent of their turnover in 2009 – not just due to the crisis but also the result of hard price policy. 

For all direct marketing activities the budget is predicted to be ten to 15 per cent lower this year and many companies are investing more and more in the online segment to save money and keep costs low.

In summary, the Czech Republic is one of the most developed eastern European markets generally. Although   the early mover advantage – successfully adopted by the first big mail order companies – is no longer available, the market potential and the relatively stable purchasing power nevertheless makes the Czech Republic a very interesting market for those looking to expand in the region.

Susanne Hornikel is managing director, Direct Success GmbH