Commentary & Analysis
The Marketing Mix: The Changing "P"
By Barbara Pellow April 5,
By WhatTheyThink Staff
Published: April 5, 2006
By Barbara Pellow April 5, 2006 -- You have decided what your target market is and how you want to position your firm in the market. You have gone through the process of clearly identifying your marketing objectives and the strategies you will employ to meet those objectives. You are now moving into the decision-making process for defining the actual tactics you will utilize. These tactics are called the Marketing Mix or the 4 Ps. With Internet well entrenched in the world of communications, print service providers need to look at the world as their "place." Product : This is the physical product or service offered to the customer. It also refers to any services or conveniences that are part of the offering. Price : Pricing decisions need to take into account profit margins and probable competitive responses. Pricing needs to incorporate not just the printing, but the value-added and professional services accompanying the offer. Promotion : Promotion decisions are those related to communicating and selling to potential consumers. Promotion decisions involve advertising, public relations, direct mail, the Internet, etc. Place : Place simply refers to how you will sell your products to your customers. What you are selling will directly influence your distribution model. "PLACE:" Sales and Distribution in an Internet World A crucial decision in the development of any marketing mix is the correct identification of the right distribution channels for building your business. The question of "how to reach the customer" is critical. The place is where you can expect to find your customer and consequently, where the sale is realized. Place means that you have to look for the right distribution channel to reach your customer. Place is not where your business is located, but where your customers are. For a small retailer, it might be a specific city. For a boat manufacturer located in the Philippines, the real "place" is the entire world. With Internet well entrenched in the world of communications, print service providers need to look at the world as their "place." The rules surrounding the sales and distribution of printed materials are truly being redrawn as e-business, consolidation, and integrated supply alter the relationships between manufacturer, distributor and customer. But how can print service providers best leverage sales and marketing channels to grow in this era of change? Distribution Considerations Channel selection and deployment is one of the most critical issues facing print service providers today. Customers are in the driver's seat, as they should be, when it comes to the buying relationship. Powerful products and, to some degree, great brands no longer provide sustainable differentiation to customers. Customers are looking for superior value in all of the solutions they consider. Increasingly, the sales channel creates the most powerful and sustainable differentiation in delivering superior value to customers. Increasingly, the sales channel creates the most powerful and sustainable differentiation in delivering superior value to customers. Unfortunately, print service providers are frequently prisoners of their heritage. Their sales channel design and deployment is driven by past experience. They continue to do the same thing they have always done, only more and faster, not necessarily better. Printers that had a strong focus on company-owned field sales channels continue to expand that organization, often losing productivity, effectiveness, and profitability. For many print service providers today, their strategy in deploying sales channels keeps them from establishing the highest performance, most effective channels. To grow their businesses, print service providers must expand to new geographies, reach new customers and ultimately grow market share. The print service provider today is typically designing sales channels from the inside out; that is, based on a company-focused strategy versus a customer-focused strategy. Distribution starts with how the customer wants to buy. The most common option in the printing market is direct sales, where you own the salesperson who deals directly with the end customer for the product. Most direct sales companies are B2B, and are usually selling either commodities or very complex and expensive capital goods. Print service providers do both. In some instances, print is viewed as a commodity sold to the procurement department with the value-add of supply chain management. The key consideration is price. In others, the printer is structured to provide comprehensive business communications services that include variable data, mailing, kitting, fulfillment and distribution. These complex sales require direct customer interface. To grow their businesses, print service providers must expand to new geographies, reach new customers and ultimately grow market share. Few companies, however, can achieve their objectives with a single channel strategy. Print service providers are assessing a variety of different channels to reach their customers most effectively. Leading companies have a combination of many different channels because they have segmented their markets and realize that different customers buy differently. Print service providers need to assess who customers buy solutions from and how they buy them. Direct field sales organizations (hunters and farmers), inside sales, distribution, resellers, reps, Internet, catalog, OEM, integrator, retail, supply chain relationship? They also need to understand what the expectations are of the print service provider. What level of service and support is important in the buying and implementation process? Leading companies have a combination of many different channels because they have segmented their markets and realize that different customers buy differently. TanaSeybert Cheryl Kahanec, Corporate Vice President of Marketing and Technology at TanaSeybert, indicates that multiple channels are critical to her company's success. TanaSeybert has more than 40 direct sales people. The focus of the direct reps is on strategic vertical market sales, including financial, insurance, fashion and retail. In addition, specific direct reps target the complex annual report market and a certain number sell "service offerings" including digital print, large format, and mailing and fulfillment. TanaSeybert Digital operates as a trade printer for other document service providers that need digital printing, but have not yet invested or do not have the resources to make the investment. Other printers in the NYC market have become a channel for TanaSeybert to drive volume to its digital color devices. According to Kahanec, "The Internet will continue to play a bigger and bigger role. By leveraging the Web, our customers are actually becoming a sales channel. We have a large insurance client that wants strong control over its brand identity and has established a Web site for all sales support materials. Financial advisors log on and order brochures and collateral; the insurance company makes sure materials are in compliance; and the advisor places the order with his or her credit card. We fulfill directly to the financial advisor, but the insurance company, in effect, is doing the selling for us." By leveraging the Web, our customers are actually becoming a sales channel. F.P. Horak Tim Dust, President of Midland, Michigan, based F.P. Horak, also realized that distribution was essential to business growth. Sixty percent of revenues are generated through direct sales reps and forty percent come through its distribution network. Its direct sales focus is confined to a seventy-mile radius. Dust understood that to sell total print management requires a direct sales focus, and if FP Horak was going to grow, it had to increase the number of "feet on the street." To extend its geographic reach, F.P. Horak is strengthening its relationships with critical distribution partners by assuming an ownership stake in their businesses. This past year, the company assumed a fifty percent ownership stake in Cincinnati-based Prograde. Today, Prograde services clients in the Midwest and on the East Coast. It has a philosophy that closely aligns with F.P. Horak's. Prograde works to blend traditional print management with technology solutions and has a proactive approach to meeting customer needs. According to Dust, "We are continuing to look for strong distribution partners like Prograde that will help us broaden our geographic presence. This will be essential to business expansion and reaching our objectives." Extending Reach But that isn't F.P. Horak's only avenue for extending its market reach. The Internet is also a critical part of the distribution mix. Dust laid out a plan to integrate Internet technologies and business-to-business e-commerce into his distribution model leveraging Printable technology. One of its key successes was with Dow Corning. According to Dust, "Today, companies like Dow Corning are turning to F.P. Horak for print supply chain management solutions. F.P. Horak manages the documentation for more than 10,000 products for Dow Corning. With our Web based capability, we delivered a 25 percent reduction in fulfillment costs, 20 percent reduction in printing costs, fewer back orders, improved employee productivity and assurance that customers were getting the right orders at the right time." VistaPrint is an Internet-based print service provider, self-described as a source for high-quality graphic design, Internet printing and premium service. VistaPrint 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. While its primary channel is the consumers logging on via the Internet, the company also has partnership programs in place to extend distribution. Structuring the right channel may be one of the company's most critical marketing decisions. For example, VistaPrint offers an affiliate program. Affiliates can use their Web sites to refer visitors to VistaPrint. VistaPrint provides the affiliate with everything from trackable banner ads and links to reporting and related marketing tools. The affiliate earns cash for every order placed. VistaPrint also has a dealer program. Dealers can re-sell VistaPrint products at fair market prices. The dealer can customize and purchase VistaPrint products for its clients and VistaPrint provides the dealer with: * Wholesale pricing * Reduced shipping costs * Drop-ship ability * Unbranded packaging This can be a lucrative program for print brokers, graphic designers, creative agencies and even independent sales reps. The dealer is required to maintain a minimum volume of 60 orders per year. Last but not least, VistaPrint reaches out to the enterprise client. If someone has a unique partnering or product idea that will drive more than 250 orders per month, VistaPrint offers partnership opportunities. If you qualify as an Enterprise Partner, VistaPrint will: * Supply your organization with customized printed products * Build and market a co-branded Web site promoting your unique printed products to your organization This program is designed for real estate firms, direct sales and companies looking to offer value-added services to a large base of customers, agents, franchisees and employees. The Bottom Line Any business needs two basic things to survive: customers and products. The typical print services provider has well defined products and services. The bigger challenge is driving those products and services into the market to grow the business – "place." There are a wide range of distribution channels available, and structuring the right channel may be one of the company's most critical marketing decisions. You need to decide on your "place" in the market and identify the right sales people, partners and portals to maximize market share, migrating your strategy to meet the needs of a rapidly changing marketplace.