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Industry Insight

Print Franchises Leadership Address HP MarketSplash

Last month I wrote about the launch of HP MarketSplash,

By Adam Dewitz
Published: March 19, 2009

Last month I wrote about the launch of HP MarketSplash, a Web-based service HP has started to provide “the industry’s lowest prices and fastest delivery times for brand marketing services such as professional-quality design and print fulfillment.”

In that post I asked, “Will this make HP Graphic Arts customers question HP’s commitment to their business?” From the conversations I have had with print shop owners and executives the answer is a resounding ‘yes!’ You can get a feel for this in the responses to my initial post.

Carl Gerhardt, CEO Allegra Network has shared with Print CEO the issues the leadership of print franchises have with HP MarketSplash:

The leaders of three of the major franchise companies Carl Gerhardt, CEO Allegra Network, Kevin Cushing, CEO , Alphagraphics and Rich Lowe, President, Franchise Services have engaged HP in discussions regarding the HP MarketSplash program. A conference call was held last week with Jan Riecher, V.P. HP Americas Graphics Solutions Business, and Francis McMahon, HP Americas Marketing Director. These franchise companies presented a strong case that the MarketSplash program has not been received well by their franchisees and the print for pay market in general. Moreover, the program as it is currently positioned is a huge negative for HP with virtually all of the print for pay market. Reference was made to the controversy that resulted in 2007 from Adobe’s announcement to partner with FedEx/Kinkos with a link in Adobe Acrobat. HP is facing a similar controversy with their announcement of MarketSplash. Adobe later canceled the program after meetings with these franchises and other industry leaders.

The industry outcry has not been as loud with the HP announcement. However, at this point, HP MarketSplash is not as visible and well known as was the Adobe and FedEx/Kinkos program. The intent of this dialog with HP is to request they reconsider the positioning of MarketSplash before more damage is done to the HP name as they attempt to make further penetration into the print for pay market. Additional meetings are planned with HP executives at ON Demand and at HP headquarters over the next 30 days to have further dialog regarding the issue.

It has been suggested that HP make order fulfillment capability available to all of the HP Indigo owners who have Web-enabled Print workflows. Others have insisted HP abandon HP MarketSplash altogether.

 

Discussion

By Slava Apel on Mar 19, 2009

How is the MarketSplash not visible or less visible, when they're advertising on Google:

"Business Cards For Less

Top Quality Business Cards From HP
A Name You Trust. A Price You Love
www. MarketSplash .com "?

They are paying estimated $5 per click through to acquire a customer, showing a strong dedication to online brand and presence.

By no means they're trying to hide the fact that they're prospecting for customers and are willing to pay for customer acquisition and brand development.

 

By Michael J on Mar 19, 2009

Given that market size that Vista has identified, and the fact that there is lots of bad buzz about Vista delivery, I can't see how HP is going to back down. They already did a deal with Staples in the States and a similar deal with Tesco in the UK.

Anybody talking to HP about getting all the chains to be at least equivalent to Staples and Tesco?. Perhaps they could offer MarketSplash to their customers and get the opportunity to get the impressions from what ever is aggregated through the web.

 

By Paul Edwards on Mar 20, 2009

Market is extremely over saturated with equipment from all OEM manufacturers at trade, print for pay and soon at the users/customer level. HP and others will be aggressively looking for new revenue streams to capture incremental market share and maintain equipment usage.

Paul Edwards
FormStore

 

By Matt Flashner on Mar 20, 2009

Not only the supersaturation of equipment but pushing up front cost to Printers and/or Staples on top of all this talk of online advertisement will easily kill this idea in a few months.

This feels almost exactly like what happened not only with Kinkos/Adobe Endeavor, but also with Kodak's Creative Network project, just a different talking head.

 

By Michael J on Mar 20, 2009

Matt,
I don't understand what you mean by "pushing up front costs?" I thought Market Splash was a self service portal. What's the upfront cost?

If Vista Print could make it work, why wouldn't HP?

 

By Mike In Woodstock on Mar 21, 2009

After perusing marketsplash.com for the better part of 45 minutes, I'm willing to bet that it will quickly become a money drain for HP.

Unfortunately, they will alienate a good segment of their customer base and stockholders before realizing it and pulling the plug.

The pricing chart and "free business cards" enticement on the opening page ropes you in but every link eventually leads you to calling an inside sales rep who you can hire as your "consultant". Printing aside, I'm thinking HP is much more interested in selling web and consulting services in the form of "Agency Custom Start Up Packages" to the tune of $2,999.00.

Other thoughts? Their own website (while somewhat functional) is kind of generic. Doesn't really jump out at you. I'd lump the Marketsplash logo in the same category as "Izzy" from the 1996 Summer Olympics.

It's painfully obvious that marketsplash, with it's lime green theme, is going to prove to be a costly product of groupthink at HP.

 

By Michael J on Mar 23, 2009

Just took a shorter trip through Market Splash I'm seeing something different. They offer websites for 12.95 per month. Letterhead, envelopes and business cards that can be received through the mail for pretty cheap

and - this is the big deal in my opinion - "pick up at the printer for a lot more."

So that should mean that there is enough money on the table to comp the local printer for printing, delivering and meeting a potential new customer.

 

By Ray Pinard on Mar 25, 2009

HP needs to decide what they want to be when they grow up. Are they in the equipment, service and consulting business? Or are they going to compete with the over 30,000 printers in the U.S.,many of which are their customers?

I agree that this may be groupthink gone wild. Lare organizations like HP are not very agile. It may take several months for the top echelon to receive the message that Marketspash is a bad idea.

 

By Michael J on Mar 25, 2009

@ Ray -
Isn't there a third choice: HP could network with their PSP's to make money for everyone. MarketSplash could be a way to identify customers, pass them through to PSPs, a get the PSP's to do the pick up at store option.

I think the real competition is not HP, it's Staples and the Big Box stores.

 

By Ray Pinard on Mar 25, 2009

Hi Mike:

I agree that the real competition to worry about are the larger outlets. They have critical mass and can outlast a lot of small printers over time.

With regard to HP working with PSPs towards making money for everyone, I would point out that the market sets prices, and there may not be enough money to go around.
Best, Ray

 

By Michael J on Mar 25, 2009

@Ray,

Except as I read their website the price for getting delivery through the mail was much less than the price of "pick-up". I figure that is the Staples vig, but I don't see why they couldn't give the same piece to Printers if they were part of the program.

Once you put a price on website, that's pretty much the price. No haggling.

 

By Lowis on Mar 25, 2009

Shame on HP!
HP is a Back Stabber to all indigo owners.
Stop buying HP!

 

By John Cassidy on Mar 27, 2009

I feel a boycott is order. Stop buying any HP products now. This is a slap in the printing industries face. Shame on you HP.

 

By Terry Taylor on Mar 28, 2009

To those that think that the money will be spread around by HP using local PSP's I think you have to realize that the work will go to their largest customers which would soak up all of the work. That would leave the smaller shops with nothing but their monthly bills.

 

By Michael J on Mar 28, 2009

But that's just natural competition. Nobody is going to "spread around money". Nor should anyone expect them to.

Besides HP didn't promise to supply new work. That's the job of the independents on the ground.

Remember when Xerox tried to compete against independents. They got hosed. The fact is that independents are much faster to respond than big corporations. Plus they work for their families and workers, not for a stock price.


Meanwhile of course HP will want to send the work to their best customers, not because they buy the most boxes, but because they use the most toner. HP makes money on toner, and probably loses money on boxes. The PSP's that use the most toner are probably the most successful.

The real opportunity for independents is to push HP to do the same split with every PSP who meets their standards as the deal they have with Staples and Tesco.

The advantage for HP is a much wider distribution system, plus they have an independent network so they can get better and better deals from the big box stores.

This is not personal, this is business. Business is about money. Independents and especially the chains should focus on getting a piece of what might turn out to be a pretty big money pie.

 

By Jim Corrigan on Apr 01, 2009

HP has been studying this market for nearly 20 years, and given the incestuous relationships HP, Xerox, Kodak, et al have regarding marketing and executive personnel, they felt with all the "studies" completed that now is a good time to launch. Obviously, their data shows they are not getting the market share they deserve, and/or not experiencing the full profit potential for their product and service mix, and will not get it using traditional methods.

They have of course weighed the outcry from the pay-for-print providers, and deem a boycott, even if it could be organized in such a highly fragmented industry, would likely fail. The problem is quite simple for HP: The actual market is large and the potential market is huge, and traditional methods are not working to advance them towards more and better profits. HP is a long-term thinker, and they will gladly take a hit now if it means gaining later. HP stock has been one of the few in the past 6 months that has not been devastated by double-digit or even single digit depreciation. More so, and over the past 5 years it has appreciated about 50% as of the end of Q1 2009.

They have the time, patience, and resources to make this program work where others have failed, and intend to be a big winner. Again, it is my measured opinion that they have recognized that traditional methods either will not or cannot assist them with their objectives, and hence they are taking another route. Once things shake-out, they may go back to the previous prescription, but if this is as big of a money maker that they suspect, there will be few survivors, and those who remain will be big but lean and a more risk-free base with which to practice commerce "The HP Way."

 

By Michael J on Apr 02, 2009

Good explanation. But if they find and incent the best of their Indigo installed base, I think it gets them were they want to go much faster.

It's been complicated by the talk about how everyone should become a "market service provider." The vendors have not helped by ignoring the reality that the number of printers who can make the transition is very small.

Most surviving and growing commercial printers are great at very efficient low cost printing. It's difficult to do and Google doesn't do it.

The battle is between the franchises and the big box stores. And between HP, Oce, Xerox and Ricoh/IBM. But it's not between Indigo users and HP.

 

By Slava Apel on Apr 05, 2009

Interesting phrase by Kodak's CMO Jeff Hayzlett in 2:34 of the video on YouTube:
http://www.youtube.com/v/gc0fyH76mME&hl=en&fs=1

"If you are looking for a trusted and a reliable partner, the one that won't compete against you, call Kodak."

 

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