Square-inch analysis is a method used by direct marketers to evaluate the profitability of the offers appearing in the pages of a mail-order catalog.
Direct marketing businesses must record the revenues and profits received from merchandise sales in order to satisfy basic legal requirements and calculate tax liabilities.
These costs include graphic design, copywriting, photography, print production, postage, and mailing list rental.
[2] Square-inch analysis provides the means of allocating these costs to individual items according to the amount of space their sales offers occupy on pages, on a percentage basis (as measured in square inches).
[5] The principles have remained largely unchanged to the present day, but the increasing complexity of interaction between marketing channels (direct mail, mass media, internet, retail) and sales channels (postal, telephone, internet, retail) make precise space-based profitability analyses of merchandise offers more and more difficult to obtain.
The planning stages of catalog production involve assigning merchandise offers and their space allocations to pages in a publication of finite size.
[7] As a part of a larger discipline of marketing analytics, it might be seen as an "optional extra" that follows other effectiveness measurements and precedes another cycle of strategic planning.
Non-offer areas such as front cover illustrations, postal address panels, indexes, order forms and editorial content are common in catalog designs.
The direct marketer can create "look alike" control groups (selected from the qualified mail population using random sampling techniques) to calculate the incremental revenue per square inch.