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Commentary & Analysis

How to Stay in Business

By John Giles -

By WhatTheyThink Guest Contributor
Published: March 28, 2008

By John Giles

Printers are being told to tighten their belts and prepare for a bumpy 12 months as the country falls into a recession. Experts are calling for a slow down in the economy and the printing industry may see a faster shakeout of marginal printers in the coming months. Printers who have been hanging on by their fingernails because they were unable to generate sales, failed to adopt new technology and procedures, and never had their financial house in order, will be closing their doors and disappearing.

But there is good news for the industry.  As marginal printers close, their customers will have to find new printers. The surviving printers are going to have an opportunity to increase their sales volumes and demonstrate their value to a new set of customers. Customers still need printing and with fewer choices, the surviving printers will be in better shape to control the buying process.

Pricing

Why are printers going out of business? Many didn’t charge enough and built their entire marketing strategy on being the lowest-cost producer selling commodity products. As customers begin buying printing from the surviving printers, they are expecting to pay higher prices because they realize a printer must sell products and services at a price that includes a profit. Printbuyersonline.com, an organization of professional print buyers, asked its members how much do you expect prices to increase on your print projects in 2008 compared to 2007(due to paper, energy, transportation, and other costs)? Sixty percent of the buyers expected prices to increase more than three percent and 17 percent expected a more than six percent increase in prices.

 

Printers who can help customers overcome the pressures they face the slow economy will add a value. Customers will pay for that added value and everyone will profit.

Customers will continue to attempt to negotiate lower prices from a printer, but they are in less of a position to demand lower prices because the low-ball printers are no longer in business. The remaining printers need to develop a backbone and price work profitably. Customers have seen what happens to printers who offer cheap prices. They go out of business.

Printers who can help customers overcome the pressures they face the slow economy will add a value. Customers will pay for that added value and everyone will profit.

Leverage New Technology

Some printers have gone out of business because they have failed to adopt new technology and techniques. The failure of some printing companies to find ways to make print buying easier or produce work more efficiently helped them to shut the doors faster. Many of the failing print companies used the excuse that they couldn’t get their customers to use the new technology or that the customer didn’t see a value in any new procedures.

In another survey, Printbuyersonline.com, asked its members to rate how effective they believed that print suppliers are at communicating meaningful differentiation from their competition. Seven-five percent of those responding ranked their print suppliers as fair or poor. From the responses, it looks like it wasn’t that the customers needed want the new technology, but it was because the printers were either unable to explain the value of the new technology or ever told them about it.

The remaining printers will need to get in front of the customers and demonstrate the value of the new technology. The new technology makes it easy for customers to buy printing and allows them to get better service, but customers aren’t going to change unless they have a reason.

Printers can put a dollar value on new technology and techniques. The printer can show a customer how to prepare a file properly so it will enter the workflow easier and faster. If the customer takes advantage of the new procedures, the printer can lower the price for the customer. If the customer wants to use older techniques that makes it more difficult for the printer and adds time to production, he will have to pay a higher price. Printers need to use the cause and effect of new technology and procedures and place a value on using techniques that makes buying printing easy for everyone.

Avoiding the commodity trap

Printers have to move away from price sensitive commodity work and go after the less-price sensitive printing that helps a customer sell something

Many companies will try to sell themselves out of a recession. Operating funds will be shifted to sales and marketing efforts as competition for a customer’s dollar increases. This usually means more marketing printing and mailing as advertising increases.

Printers have to move away from price sensitive commodity work and go after the less-price sensitive printing that helps a customer sell something to somebody. New technology allows printers to provide customers with short-run, high-quality, full color advertising and marketing pieces with a high return on investment. Even small companies can afford targeting their message because of the production efficiencies offered by most printing companies. Add any variety of web-to-print solutions, such as PURLs or VDP, and any size print shop can give a customer a reason to buy more printing. The printed material will have a higher value in the customer’s mind and the printer can charge more for it.

There are some printers who looking forward to the coming year because they can move quickly and help their customers overcome their recession woes. All it takes is pricing discipline, a commitment to demonstrate the value of their company and its technology to the customer, and a focus on the customer’s real need of increasing and maintaining his sales during the recession.

 

 

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