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Columbia House.

The business idea 38 years ago was simple and straightforward. It's success was astronomical. That's the story of the Columbia House Co., which today is the Wabash Valley's largest employer and one of the top two major audio and video clubs in the nation.

Located in Terre Haute, Columbia House began in the mid-1950s as a test for a CBS executive's idea to market music through the mail. It was a viable marketing idea because music had become more commonplace in the home in the early 1950s. Almost everyone had a phonograph and a mailbox--the two items necessary for Columbia House to make a sale in the home.

Immediate positive response to the club marketing idea and a virtual explosion in the music-reproduction industry over the years paved the way to success for Columbia House, says Fred Whitkanack, senior vice president of operations at Columbia House in Terre Haute.

Columbia House is defined as a club, Whitkanack says. "The primary identification of a club is that you have to have an up-front communication and agreement that processes into regular communications. We communicate with our members every four weeks and have off-cycle communications additionally. We will communicate with each member 13 to 18 times a year in a promotional fashion."

One of Columbia House's most recent promotional pieces, "The Music Source" catalog, list more than 2,000 CDs and tapes available through the club. The selections range from hot new releases to all-time classics at a price Columbia House claims just can't be beat. In this specific promotional piece, established members buy and CD or tape at the regular club price and get a bonus selection. Any additional CDs or tapes may be purchased at "club" prices--and the more members buy, the more they save.

"The Music Source" goes out nationwide to club members. Prospective members are solicited through Columbia House's two broad methods of advertising: direct mailings and media advertising in consumer magazines and newspapers as well as radio and television.

The company began with fewer than 200 employees in Terre Haute in 1956. Terre Haute was selected because of railway access that was vital to a mail-order company in the '50s and because Columbia Records was manufacturing vinyl discs in Terre Haute at the time. When the club marketing idea proved successful, warehouse distribution points were established near Columbia Records' other manufacturing facilities in California and Connecticut.

Today Columbia House distribution centers are in New Jersey and Colorado in addition to Terre Haute. There also is a business organization for the company in Toronto.

Columbia House is owned jointly by the Sony Corp. and Time-Warner. These partners manufacture 90 percent of Columbia House's merchandise through companies like Digital Audio Disc Corp., which sits next to Columbia House in Terre Haute and is solely owned by Sony.

Since its beginnings in Terre Haute, Columbia House has completed several physical expansions. The company's square footage in the Wabash Valley is more than 600,000. It's hard to picture. Whitkanack, a Hoosier with a farming background, describes it as 14 acres under one roof.

That's not the only thing about the company that's hard to picture. In its computers, memory exceeds 50 billion bytes. Whitkanack resorts to similes again when describing the big business he oversees.

"I've been told there's enough direct access in the computer room to store the name of every individual who ever lived," he says.

Columbia House also has data on its millions of members stored on more than 65,000 tapes. The company deals with tens of thousands of phone calls daily and it's not uncommon for the Terre Haute operation to receive six tons of mail weekly. It mails tens of millions of promotional pieces annually to members and prospects.

All those big numbers translate into big things for the Wabash Valley. Columbia House employs 2,400 at its Terre Haute clerical and distribution center, with 90 percent of those jobs full-time. If you haven't been employed by Columbia House for 30 years, you're considered a youngster, according to George Blair, the controller. It's been a stable employer since its beginnings in Terre Haute.

In addition, Columbia House's clerical facility in Bloomington employs nearly 300. Altogether, it adds up to a $50 million payroll for the Wabash Valley.

Blair is quick to point out that Columbia House does an "awful lot of purchasing from Indiana manufacturers"--such as neighboring DADC and another neighbor, Ivy Hill, which manufactures much of Columbia House's artwork.

Columbia House has survived and thrived through the music industry's expansion since the '50s. It began dealing with monaural vinyl discs, moved to stereo, then made it through the 8-track era into cassettes and compact-disc music reproduction.

The company has high expectations for the electronic evolution. "The description of what it's going to be is unknown." Whitkanack says. "But we plan to be there and plan to be growing with it. Columbia House will continue to evolve with the market."
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Title Annotation:Regional Report West; Wabash Valley's largest employer
Author:Hopkins, Marjorie
Publication:Indiana Business Magazine
Date:Oct 1, 1993
Previous Article:Western Indiana update.
Next Article:Western Indiana's largest employers.

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