Written by Howard Fenton
Senior Technology Consultant
In NAPLs NewsTalk Live on July 24, 2012, Craig Dellinger the President of New Haven Print joined Andy Paparozzi, NAPLs VP and Chief Economist to talk about the latest challenges and opportunities for Quick and Small Printers. Both the report and the presentation were sponsored by Xerox and covered a wide variety of subjects.
When we asked Andy what we learned in the latest survey, Andy said, “Activity picks up. But it isn’t anything you can count on. One owner captures the consensus when he says “business is up one month and down the next month—we just can’t seem to win!” And now costs are rising in markets that are very resistant to price increases. In fact, nearly two-thirds of the quick and small commercial printers we survey report that rising costs are affecting profitability. Which costs? Paper, health care, wages/salaries top the list, reinforcing that cost inflation is broad based…It’s not simply that costs are rising; it’s that costs are rising in markets that are very resistant to price increases.”
We asked Craig if he shared the same experience and he said “We’re definitely seeing tighter margins with the larger quantity runs. In that space, printers have cut prices to nothing to keep presses running—it’s hard to compete. Our view is why fight in that market. If we were just trying to sell 10,000, 5,000, or even 1,000 copies, there are people in town that would do those jobs for the price of paper.”
That is not the first time we have heard this or seen this ourselves. One of the services we perform during an in-plant printing analysis is called the make vs. buy analysis. In that analysis we identify which products the company makes most and research competitive pricing. When we analyze the pricing, we always see some prices that are below the cost of the paper, which just shows how hungry some companies are to get their foot in the door.
The obvious follow up question was, what can you do when companies in your area are selling below cost. Craig replied, “We’ve been pushing other things such as mailing, fulfillment, pURLs, variable data printing, etc. We’re hitting this segment harder. Just hired a marketing person, whose basic function is to update our website offerings. We’re pushing hard to build portals with variable data printing for every customer we can think of. All of our efforts fit in with everything going more in the direction of digital and are a way for us to separate ourselves from the pack.”
But the most interesting conversation with Craig focused on the subject of printers becoming marketing service providers. We asked Craig if he was making the transition from PSP to MSP (print service provider to marketing service provider).
He said “Frankly, no. Actually, ad agencies are our main cliental. Rather than compete with them, I prefer to give them the tools and have them sell for me. For instance, currently, we are running big pURL campaigns on quality service for several auto companies. These are all email based with no printing involved and, while we’re working directly with the auto companies, the programs are being billed through the ad agency.”
This is some out of the box thinking, which prompts an interesting questions. Do you agree? Do you think it makes more sense to sell marketing services to another service provider or directly to the end customer?
If you have not heard it, the audio is available here.
Howard Fenton is a Consultant and Business Advisor at NAPL. Howie advises commercial printers and in-plants on benchmarking performance against industry leaders, increasing productivity through workflow management, adding and integrating new digital services, and adding value through customer research.