Royal Mail price proposals ''could boost direct marketing''

Proposals from Royal Mail to give it greater control over the prices it charges could see greater amounts of direct marketing being delivered, a leading economist has said.

Speaking to the Telegraph, Ian Senior said a bid by Royal Mail to increase domestic postal charges and reduce business post charges could see marketers being able to afford more direct mail shots.

Prices are currently set until 2010, but company´s chief executive Adam Crozier is pushing regulator Postcomm to completely deregulate charges.

“I think it would have an impact on direct marketing because it is all about trying to keep costs down. If the cost goes down by one or two pence per item, then the volume could go up,” Mr Senior told the Telegraph.

“If prices fall, it is possible that the Royal Mail will get a bigger market share of direct marketing, but it doesn´t mean that the volume will go up,” added a spokesperson from the Direct Marketing Association.

Royal Mail claims that falling profits on business post is forcing it to seek changes to current fees, as it says it must both be more competitive in this area and charge more from domestic customers.

The regulated postal service still controls virtually all the mail delivered in Britain.