This Month's Spectrum Summary:

(The following is an excerpt from the September 2005 issue of Spectrum, a proprietary monthly briefing published exclusively for the clients of I.T. Strategies, Inc. © 2005)

How do you market to an industry saddled with over-capacity?

This month's Print05 printing industry exposition prompts us to meet with Marco Boer to hear his ideas on how the industry can successfully market to commercial printers, an industry increasingly plagued with excess capacity. Above all users need quick payoff. His thinking is supported by industry statistics that show 27% of commercial printing shops in the U.S. operate at a financial loss and that profits tend to be very slim for most of the others (with the exception of those who are expanding into packaging where profits remain higher than in document printing).

Because most printers can't afford to invest in new equipment, we're not seeing a lot of radical innovation in products targeting this industry. It's rather perfecting or fine tuning existing equipment and offering related supportive products such as software, consulting, and a wider variety of media. Vendors are now making sure products are easier to set up and use. This puts pressure on vendors faced with the reality that they need to bring pricing down while at the same time adding features and complexity. Lower margins can be offset by offering more services, but there is the danger true innovation can be lost.

Calculating total cost of ownership is complex and vendors are supplying tools to help, such as ways to objectively measure ink usage. Vendors are working on ways to make the concept of partnering with their customers real by helping them minimize their acquisition risk and ensure they get the volume they need to support their equipment. An example of a relevant service is the Xerox Profit Accelerator, a trade-marked program covering seven key profitability building blocks.

The risk adversity in this challenging market has an up side in that it is prompting users to innovate. For example, they may find textiles can be printed on their existing equipment or that their regular copier can work for at least small quantities of die-cut labels. Photographers with inkjet printers may find their new technology opens the door to a fine art market. In short, the market is not necessarily limited to what we think it is and innovation is now more and more likely to come from the user level.

This trend seems to portend longer life cycles for the basic printer platform, and shorter life cycles for specialized variations supporting or resulting from application refinements. All this may boil down to adding a certain level of substance to those trendy but sometimes empty terms "solutions" and "partnering." In lean times it's important to remember a basic marketing element that tends to be forgotten in boom times: put yourself into the shoes of the customer.