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September 26, 2008
When Markets Evolve and Channels Collide
The document imaging/office machines market is in unique flex. As the domain of "copiers" evolved into the IT segment due to digital evolution, the process of selling these systems also evolved. While the economy grew and color machines became affordable, growth was easy. In some cases, growth was fueled by "false needs" such as people's incessant printing of e-mails. Then came reality...companies looking to control costs didn't buy as many machines — especially since the ones they had were so much faster and more efficient — and sales turned into competive battles based on total cost of ownership. Plus, the green revolution is making it fashionable to reduce paper output...and put lines like "Save a tree...Please don't print this e-mail." onto the footer of every e-mail you sent ;-)
Desperate for reliable sales growth, over the past two years companies that had been dedicated to channel sales have quickly "bought distribution" by scooping up all the major players in independent distribution. Xerox bought Global Imaging Systems. Konica Minolta bought Danka. And most recently, Ricoh purchased Ikon. Now comes the fun part.
The industry into which these systems now fit, information technology, continues to be the domain of independent dealers, VARs and system integrators. Why? Customers trust their independence at assembling the correct total solution. And these companies tend to have discrete areas of expertise in constructing complex solutions. Plus, for smaller IT companies, they provide geographic coverage. However, IBM's acquisition of consulting giant PriceWaterhouseCoopers defines the model for a large player attempting to quickly bolster consultative skills in an industry where consulting, systems integration and professional services now trump hardware sales.
I've recounted before the Ted Leavitt story that "people don't want to buy a drill...they want to buy a hole." That is somewhat the case with printers/copiers...we don't really want to buy them, we want to buy physical copies of what's on the screen in front of us or what's on the paper we are holding. But, as more documents move electronically, we don't need as many of these pages...meaning printer clicks don't grow forever. That makes the gambit to buy distribution all the more interesting. Timing is everything here.
As in all industries, channels evolve and these three big moves create a fascinating fishbowl for observing real-time evolution of a major channel of distribution. In industry after industry right now, the big are getting bigger (think JP Morgan and WaMu), and this could be a case of the need for critical mass to remain competitive in certain industries. It could just as easily be called a reaction to near-term sales pressures and not wanting to "be left without reliable distribution." In Xerox's case, the company's prior history makes the move a reasonable risk. In the case of the other two, I think time will tell if this move was good...and it will certainly say a lot about management skill.
To be continued...
Posted by jcioban at 7:54 PM | Comments (0) | TrackBack
September 10, 2008
What Politics Can Teach Us About Packaging
I was reading my AdAge last night and was struck by the story about Sarah Palin's addition to the GOP ticket. (GOP Gets Its Red Sports Car). A few weeks ago, John McCain was all substance but an old, tired retread. Enter Sarah and we get the "maverick for change." By comparison, Barack Obama was a "rock star" with no experience. Add a little Joe Biden and presto, it's "change with experience."
There is a good lesson for every product or marketing manager out there. If you have style but no substance or substance with no style, it may be hard to distinguish your product/service and actually sell it in today's hyper-informed, rich media access world. We all learned that in school, now the Republicans and Democrats are proving that even $500 million dollars in marketing can't get you elected without the right balance.
Who knew politicians could be such good teachers... ;-)
Posted by jcioban at 8:21 AM | Comments (0) | TrackBack
Mea Culpa...Part Deux
It has been quite a while since a post has been made...and my fledgling group of readers is probably convinced I "gave up" like many bloggers do. In reality, we've relocated the company, endured power problems at the new office followed by a construction accident in the building that resulted in flooding of our space, loss of a major client concurrent with the landing of multiple new clients, and a cash crunch caused by the changes in revenue along with a sluggish economy. All this since April.
In short, my company turns out to be a lot like everybody else's company. Challenged by competition, the economy, evolving markets...and life. I guess that makes me feel good. At the same time, it reminds me how important it is to always keep learning. To always keep adapting. To always have a positive outlook and to be facing forward. It reminds me that I am human, with all its promise and all the flaws that go with that categorization.
I hope you will rejoin me on my journey through marketing topics in the weeks and months ahead.
Peace.
Posted by jcioban at 7:59 AM | Comments (0) | TrackBack
