By Barbara Pellow July 19, 2006 -- Graphic communications company owners continually complain that profit margins are rapidly deteriorating in the U.S. market, in part because offerings are perceived as commodities. To dispel this belief and restore the graphic communications industry to sustainable growth, firms are emphasizing specific niche opportunities and catering to more focused customer needs. Successful service providers are taking either a vertical or horizontal target market approach to de-commoditize their product and service offerings. Definitions of Vertical and Horizontal Marketing Vertical marketing is a term used to define a company's approach towards targeting that focuses on specific industries. For example, DST Output is focused on a limited set of vertical markets with a very specific application. As a customer communications company, DST Output provides integrated print-and-electronic billing, customer care, and customer communications solutions to financial services, communications, insurance, healthcare, and utilities companies. Similarly, firms like One to One Gulfcoast have also taken a vertical approach. They have focused their attention on the "not for profit" market and increased the communications impact and response rates through the use of personalized text and graphics. Vertical markets are most often identified using the North American Industry Classification System (NAICS). When renting a list for a direct mail campaign, the list broker will typically create a list comprised of companies who have similar NAICS codes, indicating they are in the same industry. Horizontal marketing is when you single out a target audience that shares characteristics, yet can be found in all industries. Common ways to horizontally market are by company size, by geography or by job title. The graphic communications service provider typically focuses on addressing the specific interests of prospects by their title or area of responsibility -- the CEO, Chief Marketing Officer, Vice President of Sales and Distribution, Human Resources (HR) Director, or Manager of Training and Education. Each has very different concerns. To reach these individuals effectively you need to speak to, and have solutions that address, their most pressing concerns. Hit their "hot buttons" and you'll get their attention. For example, a number of graphic communications service providers are offering web-to-print capabilities to move the power of custom communications into the hands of the resources closest to the end customer. The emphasis is on selling template-based solutions to organizations that have multiple distribution channels. This type of application can be deployed for insurance agents, car dealerships, retail outlets and franchises. The appeal to the Vice President of Marketing is improved relevant communication with the end consumer while ensuring protection of the brand. Horizontal marketing is when you single out a target audience that shares characteristics, yet can be found in all industries. Horizontal Marketing Reaps Tremendous Benefits at Grant Morris is President of PrintPelican, a private company owned by the TPG Group (Topline Printing and Graphics) with two major plants, one in Riviera Beach, Florida and one in Toronto, Canada. Morris started the company twenty-four years ago in Calgary, Alberta. When he started, fast moving technology had not yet affected the graphic communications industry. Morris, however, decided his firm wanted to be on the leading edge of technology. It developed advanced workflow solutions through government grants, was an early adopter of CTP, and was one of the first firms in the industry to provide customers with high-speed web interfaces. As Morris evaluated the future direction for the business it was clear that more and more volume would be Internet driven. This was the genesis for, a one-stop shop for commercial printing. Whether the client wants brochures, calendars, catalogs, or magazines, PrintPelican has the infrastructure and technicians to handle the work. Clients have the ability to order printing, pay for services online and receive online proofs. While Topline Printing and Graphics services a number of Fortune 1000 clients, PrintPelican targets its offering to a broad number of mid-tier and smaller business in a broad array of horizontal markets. It provides high quality four-color printing and offers cost-effective online solutions at a lower price as an alternative to traditional printers or instant printers. Customers can supply their own files or use PrintPelican's web-to-print templates. Templates are available for brochures, postcards, rack cards, business cards, bookmarks, door hangers, greeting cards, newsletters, catalogs, magazines, stationery, and presentation folders. PrintPelican guarantees its printed products are defect free, and if an error does occur, reprinting from original copy will be produced at no cost. Instant online pricing is also available. In deciding on the application mix, Morris spent time understanding the market. He said, "We looked at what was selling in our plants and researched what other companies were offering. We felt that we could attract an array of different companies throughout North America that were not geographically close to a good, high quality printer." When asked about how they attract clients, Morris said, "Our primary vehicle is the Internet. We have invested heavily in search engine optimization. We pay Yahoo! and Google for leads. We have a team that is solely focused on optimizing our web site." PrintPelican has been operational for 24 months and contributes more than 50 percent of Topline Printing and Graphics' $24 million in annual revenues. Because of the success of PrintPelican, Topline Printing and Graphics is now directing its marginal clients to the web. Morris said, "The benefits are significant. With the Internet, it is a cash business. There has been a dramatic improvement in our cash flow as a result." "The benefits are significant. With the Internet, it is a cash business. There has been a dramatic improvement in our cash flow as a result." Morris took his horizontal focus one step further. He looked at the world of custom publishing and realized it was a significant market opportunity. Custom publishing is the delivery of editorial content from a sponsoring company to a target audience, whether internal or external. The objective of custom publications is to provide intrinsically valuable information and interactions that move the perception or behavior of the audience in a desired direction. According to the Custom Publishing Council, U.S. companies spent $48 billion on custom publishing in 2005 and expenditures have doubled since 1999. Circulation has grown 37 percent since 1999, and there are an estimated 34 billion copies of custom magazines distributed annually in the U.S. As part of the PrintPelican strategy, Morris recently formed This is a new, interactive web site that offers a web-based wizard to simply the development of magazines and catalogs. It also offers the ability to select a custom size that deviates from the traditional 5 1/2 x 8 ½ and 8 1/2 x 11 formats. The web site assists users in becoming more knowledgeable by offering information on a wide variety of services including full-color magazine and catalog printing. It is targeted at the business professional looking for an effective marketing tool for advertising, a motivated journalist seeking an outlet for an ingenious story to the public, or a young musician looking to share talents with the world. Find vehicles that appeal to a specific audience and then speak their language. Growing Horizontally Either horizontal or vertical marketing works. The key is that graphic communications companies need to focus. To target your efforts either vertically or horizontally, find vehicles that appeal to a specific audience and then speak their language. Users are willing to pay more for functional or industry expertise. That means that you can charge higher prices. Users also tend to listen to recommendations and endorsements from their peers for your products and services. Concentrating on a horizontal or vertical market will create "word of mouth" buzz and increased business opportunities. More and more graphic communications service providers are leveraging digital technology and target marketing approaches to open doors for growth --vertically in industries with which they already experience, and horizontally in profitable new markets.