Commentary & Analysis
Setting the Course
By Barbara Pellow More than ever,
By WhatTheyThink Staff
Published: July 11, 2005
By Barbara Pellow More than ever, the use of multi-media and cross media strategies is critical to successful business communications. July 11, 2005 -- We've all seen how disruptive technology can upend established industries--whether it's electricity replacing whale oil for lighting, or word processing making manual typewriters items of nostalgia sold on E-Bay--or the microprocessor shifting computing power from mainframes to PCs. With new or evolved technologies come new industry leaders and new methods of distribution; methods that get closer to the customer and give them more direct access. No industry has experienced as much change as the world of graphic communications. As little as 10 years ago, businesses were limited to print, TV and radio as communications outlets to the masses. With the growing application of digital, wireless and Internet technologies, the communications options have expanded to include PDAs, electronic billboards, cell phones and even gas station pumps. The overriding objective is to utilize media more effectively to target defined audiences and communicate updated information and promotions quickly. More than ever, the use of multi-media and cross media strategies is critical to successful business communications. Today's print service providers need to develop a solid business strategy in the face of this changing technology. With the day-to-day pressures of meeting deadlines and handling customer issues, printers frequently don't take the time to reflect on the strategic direction and the course they are setting for their businesses. Henry Mintzberg, in his 1994 book, The Rise and Fall of Strategic Planning, points out that people use "strategy" in several different ways, the most common being these four: Strategy is perspective; that is, vision and direction. Strategy is a plan, a "how," a means of getting from here to there. Strategy is a pattern in actions over time; for example, a company that regularly markets very expensive products is using a "high end" strategy. Strategy is position; that is, it reflects decisions to offer particular products or services in particular markets. This definition of strategy is aligned with four critical success factors relative to evolving your business model in a market that is facing disruptive technological change. They include: Recognition of the changing market dynamics and leading the change in your organization--setting the direction and the vision Understanding how to leverage technology to participate in the multi-media world Understanding your target market and customer needs in your selected market(s) as well as how to position your offerings and services in those markets Educating customers on the "new business communications" opportunity and the services that you provide Setting the Direction The key to building a good strategy starts with the acknowledgement that the market and your customer base are changing. New technology has created new expectations among audiences. The key to building a good strategy starts with the acknowledgement that the market and your customer base are changing. In a recent interview with Ira Jackson, owner of Perfect Image in Atlanta, he acknowledged how different the business dynamics are becoming. He said, "Today it's a good news/bad news scenario. The good news is that the customer is much more involved in the business; it is faster and you have got more technology. The bad news is that the customer is much more involved in the business; it is faster and it requires more technology. But the market reality is that it ain't gonna change. It is here to stay. The turnaround and collaboration between us and the client are going to be much more intimate. And if we fight that as a supplier, we are not going to be around." The turnaround and collaboration between us and the client are going to be much more intimate. And if we fight that as a supplier, we are not going to be around." Given both changing technology and customer needs, print service providers need to establish a vision and a strategic direction for their organizations. There is no single right answer in building a profitable business. It does require focus on a specific target market and designing your business around the needs of that specific market. Some firms are focusing on the SOHO (Small Office/Home Office) market while others are directing their efforts toward the Fortune 500. The publications market has proved to be an important niche for some firms while others see book printing as key to their success. For example, VistaPrint decided to place its emphasis on the small office/home office market. Today, they serve more than 5,000,000 customers worldwide. VistaPrint is the source for high-quality graphic design, Internet printing and premium service. It offers small businesses and consumers a convenient, high-quality solution for graphic design services and full-color printing in small quantities, without the premium price. Davi d Motheral, COO of Motheral Printing in Fort Worth, Texas, built his business model around the publications market. The primary application focus at Motheral Printing is on short- to medium-run finished products that are 8 3/8 x 10 7/8 or 5 1/2 x 8 1/2. This positions the firm as a leader in publications with controlled distribution, including association and membership mailings, catalogs, and targeted direct marketing and sales support materials. According to Motheral, "These are applications where time is of the essence. Magazine publishers want to maximize the time that they have to sell ads and minimize the production window. Cataloguers want to change prices up to the last minute. With workflow automation, we have put our customers in the driver's seat and let them make last minute changes without disrupting our operation." Motheral's focus on a specific business model has allowed the company to build a solid infrastructure to automate and connect with its customers to compete. Leveraging Technology Once the vision is well defined, the question business owners need to ask is, "How can I become a profitable leader in the market space?" Once the vision is well defined, the question business owners need to ask is, "How can I become a profitable leader in the market space?" Firms like VistaPrint answered that in a single word: technology. Historically, graphic design and custom printing have been hands-on, laborious processes for both the supplier and the customer. Inflated supplier costs resulted in high prices for the customer, especially for print jobs in very small quantities. VistaPrint's proprietary technologies fully automate not only the manufacturing of printing, but also the manner in which orders are created and submitted. The firm incurs lower costs, which mean its customers enjoy lower prices for higher quality printing. VistaPrint also offers a satisfying customer experience without the hassle of expensive designers and print shops, or the frustration of print-at-home alternatives. CEO of Dallas-based Padgett Printing, Dave Torok, realized early on that the market was changing quickly. According to Torok, "In 1997, we had our best year ever in terms of sales and profits, but we realized the business was changing. Offset printing was becoming a commodity. The world was going digital and our customers were doing personalization." To grow the business Padgett moved into the world of digital printing, both black-and-white and color. Digital printing comprised 10 percent of its business in 2004 and the company is looking to inc r ease that to 15 to 20 percent in the next two years. Padgett Printing is getting more projects and larger projects with increasing database complexity and has made the right technology investments to provide its large enterprise customers with the services they need. Understanding Customer Requirements and Positioning Your Offer With a solid vision in place and the right technology, the next phase is making sure it meets the requirements of the target market and that the offer is appropriately positioned in the market. Rynn Johnson, VP of Sales for The Johnson Group in Rockford, Illinois, feels this is essential to success. A specific division, Red Leaf Digital, was established to drive the digital aspects of the business. The focus has been specific market niches with multiple distribution and sales channels and the delivery of Web-to-print solutions. Target industries include manufacturing, health care, education and financial services. Its client base extends throughout the U.S., with some international clients as well. The Johnson Group will work closely with a client in a specific industry vertical. According to Rynn, "We tend to productize what we are good at. We build expertise in a specific vertical and develop a successful case study. From there we target companies in that vertical segment. They may be an existing customer or they may not be." "We tend to productize what we are good at. We build expertise in a specific vertical and target companies in that vertical segment." Founder of Toronto-based Market Connections, Mike Moran, started his business with an emphasis on delivery of customized newsletters to the financial services market. When asked about the value proposition he delivers to clients, his response was, "We have two primary value propositions. One of them is the cost of production. We can produce a product much cheaper in a digital environment than we could with offset. The most important is the variability that we offer. We can customize the content on a newsletter-by-newsletter basis. A financial advisor may have 200 different customers who have different needs and want different bits of information delivered to them." Educating Customers Prospects and existing customers don't always understand how advanced the technology has become relative to delivering a more relevant message to their customers. Finally, print service providers need to educate customers on the capabilities available with new technology. Prospects and existing customers don't always understand how advanced the technology has become relative to delivering a more relevant message to their customers. Market Connections' Moran shared his customer outreach strategy. "The principal method we use to sell our product is through demonstration. We attend trade shows and marketing seminars in selected industries. We bring a digital photographic studio with us; take photos of the agents; collect pertinent business information; and then go back to our office. We compile all of the data, and then actually produce 50 copies of the newsletter and send it to them. They have a tactile product in their hands for four to six weeks and then our sales people follow-up and convince them to become clients." The Bottom Line Good strategic planning shapes the future of both your business and our industry. The hectic pace of day-to-day operations frequently prevents us from focusing on the bigger picture. While companies large and small deal with the tactics for the next week or month, they fail to look at their longer-term future. The concepts Mintzberg articulated--strategy including perspective (vision and direction), how to get there, a pattern of actions (target markets), and positioning products and services--are relevant to everyone in the printing industry. Print service providers need to have a clear a vision and use the best of technology to serve target markets. They need to streamline processes, creating time and producing opportunity. And they need to be the trusted advisor that helps their customer base translate ideas into quality communications. Good strategic planning shapes the future of both your business and our industry.