Why middle of the road print producers risk going bust

Posted by Matthew Parker

Why should printing companies care about supermarkets?

In the UK, the supermarkets have now all revealed their trading results.  There were some companies that suffered this year.  Others had surprisingly good results.

As expected, the supermarkets with the lowest prices, such as Aldi and Lidle, did well. They expanded their market share. But it wasn’t just the price cutters who were the winners.

Supermarkets with the highest prices did very well

Is-printing-industry-profitable

The middle of the road is the wrong route for printing companies that want to survive

This may seem strange at a time when many people are cutting back their spending.  However, it is clear that there are still a significant number of people who are not focused on the lowest price. They are prepared to pay more for higher quality products.

The losers were the supermarkets that were caught in the middle.  They offered neither low prices nor high value products.  As a result, their sales suffered.

There’s a parallel here with the printing industry.

Print companies often follow the same business models as supermarkets

As a result, they also often end up with similar results.  Let’s have a look at how this works in practice.

Just like supermarkets, there are three broad types of printing company business model.  I’m going to examine each group.  The first group is the cost cutter.

Cost cutters can expect to grow sales

Price is a very important factor for the majority of buyers.  Printing companies that focus on lean production and low overheads will be able to benefit from this.

However, it is worth taking time to understand what makes a low cost producer.  The systems used by low cost supermarkets are incredibly sophisticated.  They have carefully researched the most efficient flows of product and customer.

Only those print companies that relentlessly focus on reducing cost and improving efficiency in all areas are likely to produce the lowest prices.  Having the most productive presses is not enough. The job management systems, pre-press workflows and finishing departments need to be just as efficient.

Otherwise these companies won’t be competitive enough to win the contracts from print management companies and similar clients.  They won’t win enough work to keep them in business.

However, cost cutting isn’t the only route to win business.  Let’s look at another type of winner.

High value solutions providers can also expect to grow business

There are now a growing number of print companies that offer value added solutions. These may include web to print, fulfillment, cross channel marketing and similar.

If these solutions are sold correctly, clients value them.  They are a way to reduce costs for companies.  They can also be a way to significantly increase the return on investment for marketing and fulfillment activities.

Once it is possible to have a conversation along these lines, the printing company is doing far more than selling product.  They are selling a way for a client to improve their business.  Price becomes less of a factor.

However, this is not an easy sale to make.  These printing companies need to have a culture that is focused on very different activities than print.

Now that we have covered high value producers and cost cutters, what about the third group of printers?  It’s here that problems start to be apparent.

Middle of the road print producers are going to suffer

The middle of the road print producers tend to be more traditional printing companies.  They don’t offer high value solutions to customers.  They don’t have a ruthless focus on efficiency (although they may think they are a low cost producer).

These companies focus their business models on providing good service and good quality print at a reasonable price.  The trouble is, these are taken for granted by buyers.  Buyers don’t attach a value to quality and service.

But middle of the road producers don’t offer the lowest prices.  And they don’t offer added value services.  So these companies are going to struggle in today’s market.

It’s time for printing companies to take action

It’s important to set out your business strategy.  Which of the three business models do you follow:  cost cutter, high value solutions provider or middle of the road producer?

If you follow the third model, I would strongly suggest that you consider changing your strategy.  Take note of the evidence of the recent supermarket results.
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