Commentary & Analysis
Sticking to the Plan
By Noel Ward
Published: February 20, 2009
Kodak's continuing strategy of integration
In this age of ongoing and mounting uncertainty virtually every type of business is cutting back wherever they can. Thinner staffing and reduced expenditures in a variety of areas are part of the new normal and many printers have to be wondering how the support they need and expect from equipment and software vendors might change. The answer can vary substantially from one company to the next and no one can really predict how the changes will ultimately impact individual print providers.
It's probably safe to assume that overall service and support of installed or newly purchased systems will remain unchanged. After all, these are based on specific service level agreements and no vendor is likely to drop the ball on this core level of support. Another area, though, is how vendors will maintain their overall branding and go-to-market strategies over the course of this economic downturn. These days, those strategies are not just the positioning of a company and its offerings to print services providers, but how they reach out to printers' customers.
All the major players have their own plans in this area and here in the first quarter of the year is a good time to take a look at what some of these industry leading firms are planning. First up is Kodak, the household name company that has been reinvented in just a few years from being primarily known for analog film and imaging to having state-of-the art products for digital printing, offset printing, consumer photography and more.
Five years ago Kodak CEO Antonio Perez and his management team laid out a plan to integrate its separate operating companies: Kodak, Kodak Versamark (previously Scitex Digital Printing), Nexpress (formerly the Heidelberg Digital joint venture), KPG and Creo. While the latter four have all been under the umbrella of Kodak's Graphic Communications Group these business units had separate management, sales, marketing and support organizations. The Nexpress and Versamark businesses are now aligned as a single organization called Kodak Digital Printing Solutions.
"It was natural and expected that we'd bring the two digital print organizations together," says Kevin Joyce, Worldwide Vice President of Sales and Marketing, Digital Printing Solutions, "but like many things it’s an issue of timing. You don’t want to adversely impact customers by moving too quickly, but from a competitive point of view you don't want to move too slowly. This is the right time to do this strategically for Kodak and moreover, it is intended to make it simple for our customers to do business with us and provide revenue-generating opportunities for their customers."
Like most of its competitors Kodak offers both electrophotographic (EP) and ink jet print engines and offers automated workflow software tools. At the same time it offers products, equipment and software for offset printing. This distinguishes the company in the marketplace and offers customers the potential for one-stop shopping. Having a single source for the majority of their equipment, service and supplies can be compelling for printers using both digital and offset technologies. On one hand it offers the potential for forging a deep and wide relationship with a vendor and, on the other hand, should problems arise, provides "one throat to choke," as some printers like to say.
The idea of a single provider is of growing importance as ink jet printing shoulders its way onto the playing field. Kodak's Digital Printing Solutions organization places the NexPress and Versamark product lines under the aegis of Isidre Rosello, formerly head of the Versamark business unit, and he has listened when customers talked.
"Customers in many of the markets we're in want to know which printing technology is best for a given application. With separate sales, support and marketing organizations we couldn't really provide the kind of holistic view of all the choices that customers really needed," explains Joyce. The new structure makes it much easier --simpler-- for customers to get the information they need to make the best decisions for their businesses."
Yet given the turmoil in world markets for just about everything, why make this realignment now? It seems as if there might be other more pressing issues. But Joyce sees a greater opportunity.
"In my opinion, this economy actually provides a great opportunity for digital print to really prove itself as a marketing tool, especially when combined with data mining and campaign management software that show the return on investment from hybrid and integrated marketing solutions. I think we're going to see a greater acceleration of this than we would have seen if the economy had just stayed at its usual pace."
Certainly almost every business that puts ink or toner on a page is under pressure because so much of printed materials come out of marketing budgets. As usual (and in the face of all logic) marketing and advertising are the first places companies look to cut their costs. Like Joyce, many proponents of digital print, myself included, believe that if marketers and their clients would wake up and smell the toner and ink, they'd be all over digital printing as part of a marketing program that could deliver the results that prove the value of their marketing investments. But waking them up is the trick.
Walking the talk
Part of Kodak's plan for the wake up call is continuing to educate print providers and their customers about how digital print can be a effective strategy for succeeding in our down economy and to come out stronger and more profitable. Walking the talk, Kodak is changing its outreach to rely less on trade shows and putting its efforts and dollars into communicating with print providers and their customers on a business level rather than an equipment one, explains Dave Wigfield, General Manager, Prepress and Digital Printing, United States and Canada.
"One of the things we've done over the past year is help printers and their customers get their databases together so we can reach out to them more effectively on a one-to-one basis," he says. "We've developed programs that define customers segment by segment and also link products and solutions. This shifts the focus from selling a box to showing a printer and his customer how adopting the right digital technology is a smart move for their business."
These include programs that help printers build business plans, explain the new capabilities to their customers, and how to use Kodak equipment and software more effectively so they can see a faster return on their investments.
Kodak drew a lot of attention --and some criticism-- at the AIIM/On Demand conference two years ago by significantly limiting the amount of equipment it brought to the show. Pundits questioned the wisdom of this move, but the "less is more" approach has proven effective. As a continuation of its trade show strategy that started in 2007, Kodak has opted not to exhibit at this year’s AIIM/On Demand conference. Kodak will be at PMA without equipment, focusing instead on applications and business growth opportunities made possible by Kodak’s solutions. This approach to trade shows has freed up resources for road shows, bringing customers to demo centers and the like, tactics that have proven to be effective.
"It lets us do a better job of walking the talk and relating to customers on a more personal level," explains Don Whaley, Director of Marketing for the US&C Region of Kodak’s graphic communications business. "It takes the pressure off the customer to travel to a show and positions our sales reps more intimately with customers. For example, suppose we do a targeted 1-to-1 promotion inviting customers to attend on of our road shows. Having the sales reps involved in the whole process provides better cross-training for them and that results in a better customer experience."
"At the end of the day it changes the way we think and the message our customers here," says, Wigfield. "It really says, 'We want your business,' and that's a critical message to communicate these days."
"It's a real continuation of our portfolio," says Jeff Hayzlett, Kodak’s Chief Marketing Officer. "Whether it's offset or digital, it's Kodak, and we have the solutions a printer needs to grow his business. The companies that survive in tough economic times are the ones that are easy to do business with, and as Kevin pointed out, we want to make it simple for customers to do business with Kodak."
Kodak is also ramping up on how and where it is promoting itself. While conventional wisdom is to reduce marketing expenses when the economy is soft, Kodak is actually increasing its efforts. This has historically proven to be one of the best moves a company can make when times are hard. Companies that promote themselves throughout an economic slump almost invariably come out stronger and better positioned to succeed when as business improves.
"Where other companies are backing out of things like sports sponsorships we're actually increasing our visibility," says Hayzlett. "We're doing things where we find more aggregation of customers and will be doing more one-to-one activity, giving our sales people more tools, adding more road shows and really trying to get in front of the customer as much as possible," explains Hayzlett. "And that's in Europe and Asia as well as in North America."
"We've organized ourselves into segments and are offering a solution, not just equipment," he continues. "There are solutions and toolsets for packaging, publishing, commercial print, and so forth, so we show a customer how to use Kodak technology in the marketplace, all through our go-to-market sales organization."
Finding its own road
For the past few years Kodak has taken a different road than many of its competitors. This is primarily because it is really a different type of company than the other players in digital printing, has grown out of acquisition of other firms, and because it competes in a wider number of market segments. With the Digital Printing Solutions group looking to further redefine the company both internally and to the marketplace, the challenge for Kodak will continue to be how to press forward in a weak economy while managing its still evolving strategy.