Manufacturers of Digital Print Technology – a Marketing ... · Manufacturers of Digital Print Technology – a Marketing and Strategy Analysis VINIT MALHOTRA Master’s Thesis in

Manufacturers of Digital Print Technology – a Marketing

and Strategy Analysis

V I N I T M A L H O T R A

Master of Science Thesis Stockholm, Sweden 2006

Manufacturers of Digital Print Technology – a Marketing

and Strategy Analysis

V I N I T M A L H O T R A

Master’s Thesis in Publishing Technology (20 credits) at the School of Mechanical Engineering Royal Institute of Technology year 2006 Supervisor at CSC was Christer Lie Examiner was Nils Enlund TRITA-CSC-E 2006:161 ISRN-KTH/CSC/E--06/161--SE ISSN-1653-5715 Royal Institute of Technology School of Computer Science and Communication KTH CSC SE-100 44 Stockholm, Sweden URL: www.csc.kth.se

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“The technology is interesting, but the business models will decide the future of this industry”

- Respondent at a manufacturer of digital printing equipment

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Manufacturers of Digital Print Technology -A marketing and strategy analysis

Abstract This thesis examines the strategies the manufacturers of high-production digital printing machines are using to reach out to the Swedish digital printing market. Six major manufacturers, currently competing for customers in a struggling graphic industry, have been studied. The study focused on how marketing, sales and business strategy are influencing the digital printing market and its actors. Therefore, an investigation of experiences and thoughts of the manufacturers’ environment was conducted to gather a useful insight about their environment. Furthermore, the main purpose was divided into two underlying questions: How are the equipments being marketed and sold, and what factors affect the competition in the graphic industry for digital printing? This investigation is based on a qualitative research approach and interviews with respondents at the manufacturers. The data was structured and analyzed using the five forces framework. The conclusions of the research study were that the companies use marketing and sales to create long-term relationship with the customers, so both can be profitable in a very tough, but potential digital market. In addition, the rivalry is seen as fierce by the manufacturers and they differentiate themselves with the solutions and applications surrounding the machines. The study also concluded that the manufacturers attempt to educate and inspire the customers with business and solution orientated topics.

Key words: digital printing, marketing, sales, business strategy.

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Tillverkare av utrustning för digital tryckteknik - En marknads och strategi analys

Sammanfattning Detta examensarbete undersöker vilka strategier tillverkare av hög-hastighets digitala tryckpressar använder för att nå ut till svenska digitaltryck marknaden. Sex av de största tillverkarna, som just nu konkurrerar på den svenska digitala markanden, har varit med i studien.

Examensarbetet fokuserade på hur marknadsföring, försäljning och affärsstrategier influerar den digitala tryck marknaden och aktörerna som finns i den. Därför har erfarenheter och synpunkter om tillverkarnas omgivning undersökts för att erhålla en djupare förståelse och insikt om deras arbetsmiljö.

Huvudsyftet delades in två underliggande frågor: Hur marknadsförs och säljs produkterna och vilka faktorer påverkar konkurrensen i den grafiska industrin för digitalt tryck? Studien är baserad på en kvalitativ forsknings metod och intervjuer med anställda hos de olika tillverkarna. Den insamlade informationen strukturerades och analyserades efter en strategi modell.

Slutsatserna från studien visar att de olika företagen använder marknadsföringen och försäljningen till att skapa långvariga relationer med kunderna, så att båda kan bli lönsamma i en tuff men potentiell digital marknad. Konkurrensen är intensiv och tillverkarna differentierar sig själva genom att erbjuda lösningar och tjänster kring maskinerna. Examensarbetet drar även slutsatsen att de olika tillverkarna försöker att utbilda och inspirera kunder med affärs orienterade ämnen.

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Preface This thesis is part of my master’s degree in Mechanical Engineering at the Royal Institute of Technology. Therefore, I would like to use this page of the publication to express my gratitude to some people who were important in the procedure of this study. A special thanks to Thomas Mejtoft at STFI-Packforsk and Christer Lie at the Royal Institute of Technology, for providing me the great opportunity to write this thesis during the spring of 2006 and all the continues support they have given. I would also want to thank the respondents at the different manufacturers and T2F.

My final words are dedicated to my family and friends; your love, friendship and support have inspired me throughout my study years and provided me memories for life.

Vinit Malhotra

Stockholm, 7 June 2006

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Table of Contents 1 Introduction ............................................................................................................................ 1

1.1 Assigner ............................................................................................................................ 1 1.2 Objective ......................................................................................................................... 2 1.3 Aim .................................................................................................................................... 2 1.4 Delimitations ................................................................................................................... 3

2 Background............................................................................................................................ 5 2.1 Digital Printing Technology ......................................................................................... 5

2.1.1 Inkjet........................................................................................................................... 6 2.1.2 Xerography .............................................................................................................. 6 2.1.3 Digital printing vs. Conventional printing ........................................................ 6

2.2 Theory ............................................................................................................................... 8 2.2.1 What is business strategy? ................................................................................... 8 2.2.2 Porters Five forces .................................................................................................. 8 2.2.3 Business Market ....................................................................................................... 9

3 Research Methodology .................................................................................................... 11 3.1 Procedure...................................................................................................................... 11 3.2 Qualitative and Quantitative methods ................................................................ 11 3.3 Data Collection ........................................................................................................... 11 3.4 Data reduction ............................................................................................................ 12 3.5 Reliability and Validity................................................................................................ 12 3.6 Choice of respondents .............................................................................................. 13

4 Description of the environment...................................................................................... 15 4.1 Company A .................................................................................................................. 15 4.2 Company B ................................................................................................................... 16 4.3 Company C .................................................................................................................. 18 4.4 Company D .................................................................................................................. 21 4.5 Company E ................................................................................................................... 23 4.6. Company F .................................................................................................................. 24

5 Initial steps in a relationship process ............................................................................. 27 5.1 Marketing....................................................................................................................... 27

5.1.1 Trade Events .......................................................................................................... 27 5.1.2 Advertisement....................................................................................................... 27 5.1.3 Open house/Seminars ........................................................................................ 27 5.1.4 Reference marketing.......................................................................................... 28

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5.1.5 Rumours .................................................................................................................. 28 5.1.6 Direct Marketing................................................................................................... 28 5.1.7 Focus........................................................................................................................ 28

5.2 Sales ................................................................................................................................ 30 5.2.1 Pre-sales .................................................................................................................. 30 5.2.2 Focus........................................................................................................................ 31 5.2.3 Pricing...................................................................................................................... 31 5.2.4 Product ................................................................................................................... 31 5.2.5 After- Sales ............................................................................................................. 31

6 Analysis .................................................................................................................................. 33 6.1 Analysis ........................................................................................................................... 33

6.1.1 Industry .................................................................................................................... 33 6.1.2 Competitors ........................................................................................................... 33 6.1.3 Buyers ...................................................................................................................... 34 6.1.4 New entrants ......................................................................................................... 35 6.1.5 Digital printing technology................................................................................ 36 6.1.6 Marketing and sales ............................................................................................ 36

7 Conclusions .......................................................................................................................... 39 8 Suggestions on further research ..................................................................................... 41 9 References ........................................................................................................................... 43

Manufacturers of digital printing technology – A marketing and strategy analysis

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1 Introduction

This is the first chapter of the thesis and it attempts to explain the outline details of the study; introduction, assigner, objective, aim and delimitations are discussed.

Some of the premier economical profits with digital printing are that lower amount of volumes can be printed and there are no fixed costs as producing printing plates. With digital printing the product can also be adjusted (variable data) to a specific person or a targeted group. One of the disadvantages with digital printing is the production speed, which can not compete with the speed obtained with conventional printing technology as offset printing.

During the mid 90ths the first larger digital printing presses were introduced and made it possible for the printing houses to print larger volumes, which builds on the business models based on the advantages as described above with digital printing. In the beginning the variable data function was predicted to have a major success. But this function has not had a growth as expected. The reason for that can be discussed and probably depend on the different players in the graphic industries value system.

Nowadays, the printing industry is generally portrayed as an industry with overcapacity and price press. Larger volumes of equipments are sold with higher production speed to companies in the graphic industry and to companies outside the industry.

A majority of the manufacturers of digital printing equipments market and sell products from simple office printers to high-speed production machines. The larger machines are in the market between companies, business to business (B2B). Kotler (1999) describes three fundamental differences between a business market and a consumer market:

• Fewer buyers.

• Larger buyers.

• Closer relationships between manufacturers and buyers.

1.1 Assigner The assigners of this thesis are the Swedish research institute STFI-Packforsk and Royal institute of technology. The study is involved in a PhD project within the research projects “Digital Printing Community” and “DigiPrint” at STFI-Packforsk. The objective of the PhD projects is to examine marketing and business models for digital print technology. Many case studies are performed in this PhD project involving actors from the value chain for digital printing, i.e. creators, producers and customers.


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1.2 Objective The main purpose of this thesis is to analyse the strategies the manufacturers of digital printing equipment are using to reach out to the digital printing market.

A study of the marketing and strategies among the manufacturers will be conducted with basis in different marketing and strategy models.

The study will be performed by investigating the importance of issues like marketing, sales and strategy, and how these factors influences the digital printing market. To be able to analyse the main purpose of this thesis, two underlying research questions are to be answered:

How is the equipment being marketed and sold to the digital printing market?

Since this study will focus solely on larger high-speed digital printing equipment, the market is exclusively between companies (B2B). The basic idea is to identify how manufacturers market and sell their products.

What factors can affect the level of competition in the graphic industry for

digital printing? A general strategy analysis of the competition will be examined in this study.

1.3 Aim The aim and intention is to underlie future studies of this kind or similar in the PhD project “Strategies and Business Models in Digital Printing” at STFI-Packforsk AB.

Results from this study will further on assist the work on development of new business ideas and models within the field of digital printing.


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1.4 Delimitations Value system for digital printing consists of several different steps (Figure 1-1). This thesis will only involve manufacturers of digital printing technology (circle in the figure below) and the study is focused on the Swedish printing market. Six manufacturers of higher productivity digital presses will be examined. The study will not examine what technical specifications the different digital printing presses offer.

Previous studies have been carried out within the value system for digital printing. Mr Mejtoft has done two researches; Strategies for Successful Digital Printing and Perceived Satisfaction by Customers in the Digital Printing Value System. In the first one, he has examined companies invested in the digital printing machines, and in the second, companies that had bought the digital print.

CustomersAdvertising

agencies

Printing PressManufacturers

Digital Printing House

Distribution Customers End users

Figure 1-1. - Value system for digital printing, Source: Mejtoft (2006a)


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2 Background

This chapter describes some background information about digital printing technology and theory about strategy and marketing. If you want the results of this thesis to be of a scientific perspective, the thesis has to obtain a theoretical platform.

2.1 Digital Printing Technology Digital printing is not just one printing process; it consists of several different types of methods, such as Inkjet, Xerographic or Electrophotography (Johansson, K., Lundberg, P. & Ryberg, R., 2001). In this study a description of Inkjet and Xerographic technology will be carried out, because these are the main technologies used in the digital printing presses.

In digital printing technology (DPT), the printing data is transferred directly from the computer to the main printing press and there is no need to produce a separate film or printing plate as in conventional printing like offset.

A very general overview of the digital printing process is portrayed by figure 3-1.

Figure 3-1. – Digital Printing process, Source: Digital Printing (2005, p.50)

Every print process starts with the creative layout process; this is the first step in the creation of the wanted product. One of the main features of digital printing is that it has the ability to print variable data. This means that you can change and personalize the information on every single printed page (Johansson et al., 2001). Although only one document is designed, text and graphics within the document can be varied to produce many unique documents [2]. Variable data printing is a great tool for conducting targeted marketing campaigns and adapting the data information to appeal to well-focused niches [2]. After deciding what to print, the information or print file is printed with a printing press. The next step is finishing, i.e. collating, trimming, folding and stitching the finished product.

Digital printing makes it possible to produce printed matters in a short period of time, since the set up time is close to none. The print colour on the item is dry when it comes out from the press, which makes it convenient to use immediately without any problems of smearing. (Johansson et al., 2001).

The pros and cons with digital printing are (Johansson et al., 2001): • Low cost for short run printing. • Film and plates are not necessary to produce. • Shorter intake. • Variable data. • Alterations to your existing jobs can be made faster and with less expense [2]

Layout Printer Finishing Finished product

Variable data


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• The printed materials can be targeted to niches as small as an individual [2] High cost for larger run printing The print quality is not as good as offset printing

The digital printing systems developed during the last few years, which are based on non-impact printing technologies (NIP Technologies), are designed for higher productivity than systems for office use (Kipphan, 2001). Non-impact printers do not touch the paper to create the image. This group includes inkjet printers and laser printers [3].

2.1.1 Inkjet Inkjet printing is one of the simplest digital printing methods (Digital Printing, 2005) and is a non-impact printing technology that does not require an intermediate carrier as in electrophotography. Inkjet is also divided into two groups; continues and drop on demand inkjet. The ink is usually liquid and is transferred directly onto the paper. Inkjet technology is slow when comparing it with conventional printing technologies (Kipphan, 2001).

2.1.2 Xerography Xerography or electrophotography is the most common technology used in digital presses today. A xerographic digital printing press is based on the same technology as an ordinary office laser printer, but the difference is that it has a much higher productivity (Johansson et al., 2001).

2.1.3 Digital printing vs. Conventional printing Offset

Since 1970 the offset printing has spread markedly and is now the major printing technology within conventional printing (Kipphan, 2001). Offset is one of several types of lithography printing and the largest one among them. Offset lithography works on a very simple principle known as the lithographical principle. It means that ink and water do not mix; the non-printing area attracts the water and the printing area the ink [6]. The ink is first transferred from a static printing plate onto a flexible intermediate carrier – blanket – and then onto the substrate i.e. the paper, plastic or other material which is to be printed (Kipphan, 2001). The process is therefore called "offset", because the image/text does not go directly to the paper from the plates [5].

Digital printing vs. offset

When comparing these two technologies, digital printing costs more than offset to produce as run length increases, while offset has a high starting cost (Romano, 2002). This is shown in figure 3-2. The high costs for digital printing depends on that the machines are much slower in comparison to offset presses. The cost for service fees and consumables (toner, chemicals, etc) are also higher for digital printing. After introducing digital printing into the market, the developments of offset presses have taken a huge step. One is that the start-up time has been reduced, which has made it possible to print shorter runs even with offset. On the other hand, the costs for consumables for digital printing have decreased, which has made it possible to print longer runs with digital printing (Johansson et al., 2001).


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Figure 3-2. – Digital printing vs. Offset, Source: Johansson, Lundberg &Ryberg (2001, p.231)

2.1.4 Markets and trends In figure 3-3, technologies and their related markets are shown; on the right the markets for conventional printers, this is the graphic art industry. And on the left those markets for the digital printing, these are more focused on the office environment. Today, the short run segment is very hot, with both sides developing new solutions and technologies because of the growth potential. (Digital Printing, OCÉ, 2005). The short run market consists of, as shown in the figure, volumes taken from the graphic art industry (right circle) and the so called office segment (left circle).

Figure 3-3. – Technologies and their markets, Source: Digital Printing (2005, p.51).

Romano (2006) describes that all kind of printing houses are more interested of digital printing and that it generates new opportunities and profits. Compared with offset, digital printing complements offset lithographic printing. He also explains that the future of printing industry includes digital printing and it will affect everyone in the printing industry. Furthermore, the digital printing quality is not seen as an issue anymore; other topics like productivity, reliability and sheet size are more interesting.

The trends where the different printing technologies compete with each other can be summarized in these steps (Romano, 2006);

1. Networked laser printers challenges copiers 2. Copiers are challenging digital presses 3. Digital presses are challenging offset 4. Inkjet may challenge everything

Offset

Digital Printing

Volume

Total

Cost


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2.2 Theory There are no exact definitions of what strategy is. The term is used in different occasions and aspects, therefore the meaning of it can vary. In this thesis the author will use the strategy phrase used in business. An explanation of it and the strategy framework used in this thesis have been made.

2.2.1 What is business strategy? Johnson and Scholes (1997, p.10) describes an overall definition of strategy as follows: “Strategy is the direction and scope of an organisation over the long term: which achieves advantage for the organisation through its configuration of resources within a changing

environment, to meet the needs of markets and to fulfil stakeholder expectation.”

Their definition can be summarized as follows [1];

A business should be asking itself where it is trying to get to in the long-term (direction) and in which markets it must compete in (market). In such markets the business has to consider what kind of activities are going to be involved (scope). The competition in those markets pushes the organization to perform better in some way, so some thoughts on how that can be achieved should be done (advantage). Resources like skills, assets, finance, relationships, technical competence and facilities are required in order to be able to compete (resources). There are a lot of external environmental factors that affect the businesses ability to compete, so it is interesting to examine what they are (environment). All should meet expectations of those who have power in and around the business (stakeholders).

2.2.2 Porters Five forces In the process of strategic analysis one can be assisted by using several tools, the one suited for this thesis is the “Five forces Analysis”. It is a technique for identifying the forces which affect the level of competition in an industry [1]. This famous framework was founded by Michael Porter and is used worldwide. The forces examined in this thesis are; rivalry, threat of new entrants and bargaining power of buyers.

The two other forces are bargaining power of suppliers and threat of substitutes (see figure 3-4).

When understanding the collective strength of the five forces, it can determine the industry profitability (Porter, 1985). The main goal with the framework is to identify if there are factors in the environment which influence the potential of an organization in an industry (Johnson & Scholes, 1997).

The forces are seen as rivals to the companies competing in the industry, and the most powerful force controls and becomes decisive when designing a strategy (Porter, 1980).

New entrants are those who want to enter and establish themselves on a new market, and the threat from them depends on how large the obstacles are to enter the market, i.e. the new entrants must deal with barriers to enter a certain market. It can be that there are already many companies competing for the customers, and there is no room for new companies. Bargaining power of buyers is how powerful the customers are in an industry. The buyers can use their power to reduce the prices on


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the products. The rivalry among existing competitors in the industry, also affect the competition in different ways and the competitors use different strategic methods to manage them. It can be an advertisement campaign or a product launch. These are done because they want to improve its position or were feeling pressured (Porter, 1980).

Figure 3-4. – Five Forces, Source: Porter (1985, p.6)

2.2.3 Business Market The thesis deals with questions within the field of marketing, and this section will describe the basic theory behind business markets, because the analyzed manufacturers are competing in a business to business market (B2B). The companies in a business market sell most of their products to other businesses. Those customers buy goods or services to use it in their own production of products. Compared with a consumer market, there are some differences like the market structure, the nature of buying unit and the types of decision (Kotler, 1999).

The market structure in a business market is that it deals with fewer but larger buyers. The nature of the buying unit usually involves more professional buyers and well-trained salespeople or marketer. Making decisions in a business market usually means a more difficult situation for the buyers, when the purchases involve large sums of money, complex technical and economic considerations. Additionally, business buyers often buy directly from producers rather than through intermediates, i.e. the business buyers do not have the same choices like shops in a consumer market (Kotler, 1999).

Industry

Competitors

Rivalry among existing

competitors

Buyers Suppliers

New Entrants

Substituts

Threat of new entrants

Bargaining power of buyers

Bargaining power of suppliers

Threat of substitutes


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3 Research Methodology

This chapter explains the research methodology of the thesis and how the research study was conducted.

3.1 Procedure Literature study

During the entire project, literature studies have been carried out. The literature consisted of books, articles and research papers about: marketing, business strategy, research methodology and digital printing technology. The literature formed as theoretical framework for the thesis.

Research method

When performing a research project like this, one has to consider the approach on how to collect the required information and to achieve reliable results. Therefore it is important to carefully reflect on the different research methods. Decisions on which methods were suited for this particular thesis have been.

Data collection

The primary data was gathered through interviews with respondents at six of the major digital printing manufacturers in Sweden. All the interviews were anonymous in this study and the companies have got fictional names for confidential reasons. There are different styles of interviews and it is very important to collect as much relevant information from the interviews.

Meetings

Throughout the thesis, meetings were conducted with the supervisors for this thesis. In these gatherings, the author got feedback and discussed different problems and issues related to the project.

3.2 Qualitative and Quantitative methods In a qualitative perspective, researches are more concerned to understand how individuals portray their own world (Bell, 1999). Backman (1998) also describes that in a qualitative strategy, the interactions between individuals are studied.

Researches using a quantitative method gather facts and study the relationship of one set of facts to another. The techniques they use will probable produce measurable conclusions (Bell, 1999). Because on the nature of the inquiry and the type of information required, the approach in this thesis was a qualitative research method.

3.3 Data Collection The primary data collected for this thesis was through interviews. There are some advantages and problems with interviews, and there are also different types of interview methods.


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Bell (1999) explains that the major advantage of the interview is its flexibility; an experienced interviewer can follow up ideas and investigate motives and feelings. But the problems with an interview are that it is very time-consuming and it is a subjective technique with risk of bias.

Bell (1999) continues to describe that interviews can be portrayed as formal and informal. In the completely formalized interviews the interviewee behaves like a machine, and in the absolute informal ones, the nature of the interviews are determined by the individual respondents. A structured interview can have the form as a questionnaire or a checklist, but then there is no opportunity to ask specific questions as in an unstructured interview. But the problem in an unstructured form is that it requires knowledge and experiences to control the interview and the relevant topics.

The most common interview methods when collecting main data are somewhere between the most structured and unstructured technique, where there is room for the respondent to talk freely, but with a slight structure to ensure that the topics are covered. To guide the interviewee a framework is often created and the advantage with this kind of focused or guided interview is that an analysis can be simplified (Bell, 1999).

Without a proper interview framework, it is easy to lose focus on the relevant problem area and the framework should have a logical structure (Lantz, 1993).

For that reason, an interview framework has been created for the interviews to support the author. The interview technique used in this thesis was the focused method. It is important for the researcher to control the development of the dialogue during the interviews so every main topic in the interview framework is covered. The topics in this thesis are about marketing and selling different products, so it can happen that the respondents talks in a commercial manner.

Also some pilot interviews were performed to review the framework before interviewing the actual respondents.

3.4 Data reduction Before the analysis and presentation of the results, the collected data from the interviews must be reduced to be relevant for the specific research area (Lantz, 1993). Reductions of the obtained data from the interviews in this thesis have been made so it can be related with the purpose of the thesis.

The interviews have also been recorded. The recordings were done because important data can be lost or reduced when an interviewee only takes notes during the interviews (Lantz, 1993).

3.5 Reliability and Validity According to Bell (1999), the procedure of collecting data must be critically examined to verify if it is reliable and valid.

Reliability is a procedure which produces similar results under constant conditions on all occasions (Bell, 1999). A reliability test for this thesis has not been carried out to examine if another researcher would obtain similar data.

But some concerns should be made as Bell (1999) describes the respondents opinions might have been affected due to different circumstances. In this case, the respondents might have changed their way of working with marketing or sales and that could give


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diverse results from the ones obtained in this thesis. The intention of this thesis was however to be a cross-section study and not a longitudinal study.

Validity is weather an item describes what it is intended to describe. By discussing the obtained results and drawn conclusions with the supervisors or other researchers, one can confirm if the intention of the interviews were obtained after conducting them (Bell, 1999).

3.6 Choice of respondents The choice of respondents was prepared after discussions with the supervisors. First, we discussed which manufactures were to be approached for the thesis. The decision to target seven companies was made. One company did not respond at all, so there were six respondent manufacturers included for the study. When contacting the companies, an approach towards the marketing and sales department was made with obtained contact details from the supervisor and phone calls with the different companies. When describing the objective and problem definitions of the thesis, some suggestions on possible respondents were given to conduct interviews with.


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4 Description of the environment

In following chapter, the six different respondent companies and their environment are described. The purpose of this chapter is to show what kind of business market they are competing in, and what thoughts they have about it and the digital printing technology. Furthermore, it serves as a basis for the reader to attain a deeper understanding for the studied problem; the chapter is totally based on the conducted interviews with the different respondents.

4.1 Company A The interviewed person has been working within the graphic industry his whole professional carrier. He started to work with sales 16 years ago and with digital printing presses in 1998. Most of the sales staff at the company has a background from the offset side.

Customers

The customer base has changed during the years. Customers are therefore widely spread from traditional copy-shops to printers with concentration towards industrial production. Also small entrepreneur companies are targeted with no graphical background, but having great business ideas.

Market

Company A mentioned that it was easier to sell to early adopters interested in just the technology, but that market is saturated today. The market has become more mature then earlier, but is still very slow and focused on technology rather than business and applications. The whole market is going through a paradigm shift tough, not only on the technology side but also on the business aspects.

“This is not a graphic industry anymore; it is a publishing and media industry”

Company A observes that price is differentiating a digital press from another, there is no differentiation regarding quality, delivery safety and other important features. Company A believes if it continues like this, there is no profit in the market and the economical situation is risky. Moreover, many employees in the companies in the industry do not have higher academic educations, economical background and are not business minded.

Rivalry

Company A see the inertia of the market and the Internet as the markets key rivals. But the Internet is also a major asset. It generates more print and can be used as a channel to reach out to the market, mostly towards a consumer market.

“One should keep internet close to you, like you do with other enemies“


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Regarding the market position of Company A, the manufacturer sees itself as one of the major players, taking about 30% of all the sales and competes with two other manufacturers.

New Entrants

New companies starting to sell digital presses is good for the industry, but not for Company A. It is already tight for this segment and with new entrants there is a risk for a price war within the industry. The company believes the major obstacle for them will be if their products can offer a high customer value.

Digital printing technology

Company A:s visions with digital printing technology are to create an economic base with profitable customers whom can earn money on this technology and in the long term replace their products with new ones. This will hopefully generate income for the company from after-sales of consumables to the presses out on the market.

Company A believes digital printing technology works as a complement to offset and the company predicts that something will definitely replace offset, because it has no future in this industry. While the customers are not satisfied with the printing quality, the end-users ordering the print considers the digital print quality as good enough and it fulfils their needs, Company A explains.

Business model

The goal is to become top of mind when referring to digital printing technology, i.e. they want to be associated with the technology when people talk about it. Company A does not want to sell machines to the market if they are not used in the production; profits for Company A are made by consumables. Moreover they are not interested in customers who do not have the ability to be profitable with digital printing technology.

Affect other players on the market

Generally the company believes their products contribute to increase other companies’ performance, like regarding the development of printing quality.

Global perspective

Sweden and Denmark are seen as two countries where the business is good for the company. In Sweden the company works very independent from the international headquarter. Due to other needs in different nations the way of working with sales and marketing differ between nations.

4.2 Company B The interviewed person is chief executive of the company’s Swedish branch and is in his mid 50ths. He has been working at the company for about four years. He has experience from different industries, i.e. graphic arts industry and industries connected to international markets. During the years, he has worked a lot with marketing and sales.


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Within the company there are two product segments. Most of the organization consists of service technicians and applications specialists working out in the field with customers and they are the most important sales persons for the company, if they do a good job, it will generate a good reputation for the company on the market.

Customers/buyers

Today they have approximately 40 customers with total sales of 52 presses in this segment in Sweden and Denmark. Their customers are newspaper publishers, label and transaction printers. Company B targets more towards industrial customers nowadays, because these are more suited for the company’s equipment. During the years, the customers have changed and company B also looks for customers outside the graphic industry.

Market

According to Company B, the graphic industry is having financial problems; lots of fusions, companies are knocked out from the industry and many have bad profitability. The company believes that digital printing is a must today, and the company is very optimistic because the market has a stable increase in growth, but unfortunately not as much as predicted. But, Company B mentions that there are no paperless offices and the print of ordinary office papers, like A4, is just increasing the whole time.

Rivalry

Company B feels that the rivalry is tough and it is increasing. There are some really large players competing for this segment of high digital printing production and to deal with it, it is important to keep a check on the competitors at all times. The rivalry has most notable increased in the area of lower volumes.

“You want a product that could offer everything that the rivals do”

Compared with competitors, company B is quite satisfied with its current position on the market. However, there is always room for improvement like any other industries, so it is essential to guard and develop the position. Regarding the Internet as a potential rival, the company sees it more as an asset.


Company B describes that manufacturers of smaller printer equipment are entering this segment and they are now producing printing equipment for higher volumes. Some of these new companies’ technologies have limitations for higher production and the machines are still not fast enough. The largest obstacles to enter this market for them are the high demands and that machines can have stable production 24h a day.

There are some companies coming from Japan and the company considers it very interesting. Company B believes the manufacturers using the inkjet technology to have the most potential in the future.


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The current visions of digital printing are to grow at least as much as the market itself, i.e. to hold current market shares and increase them of curse when 10 % of all the printing is digital printing. Company B believes that their products fulfill the customer’s need concerning the printing quality. In the beginning there were some problems with the print quality, but it is getting better. Company B clarifies that today the print quality of digital printing technology can be compared with the quality that offset provides and in some cases it is even better. The printing quality today is good enough and gives signals to people to invest in this market and shows why the market is growing.

Business model

Company B’s business model is to be a leading provider within the digital printing market, regarding quality, productivity and profitability. The manufacturer wants to be on top and involved in leading the development.

“A customer might buy a press for 3 to 5 millions,

but in 5 years they will spend 20 millions in consumables”

To achieve this, Company B explains, it is important to work with long-term relations with their customers and to work solution orientated. Hopefully, the customers will produce large volumes, buy a lot of consumables and sign good service agreements.


The other players in this market are dealing with a threat from the digital printing technology. Rivalry is increasing and in the end it should benefit the consumers buying the print.

Global perspective

Generally on how Company B works in other countries with these topics do not differ that greatly. Maybe there are differences due to cultural variations. In northern Europe new technologies adapts much faster.

4.3 Company C The respondent is a sales manager with background from the packaging industry; today he is more involved in marketing and sales. He has worked with the printing industry for 15 years and with digital printing for 8 years.

Customers/buyers

Company C has all kind of customers; label, flexo, screen and offset printers. Both large and smaller companies like copy-shops. It is very seldom the company seeks


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for customers outside this specific target group that they have. At the moment this group is more explicit then 5-10 years ago and has not changed during the years. Back then the focus was on finding customers interested in their products; nowadays customers are interested in new technologies and company C is working more with mature customers. The company has about 600 customers in the Nordic region and 350 in Sweden.

Market

Company C predicts the number of printing houses will continue to decrease in the near future. They will not just disappear; they will be taken over. The market is getting more digitalized, further efforts on reducing costs are made and the determination to do the job much easier has a great influence on the market, using color which dries faster is one example.

During year 2000 a company launched a new high production machine that had a great impact; something enormous happened and really opened up the market. That product offered high quality and could produce lower volumes with a reasonable price. But after 9/11 2001, all kind of industries over the world had a major setback, specially the printing market. During year 2002 the printing industry had one of the darkest years in a long time and many print shops were dealing with a very tough time. Year 2004, things were getting better. Suddenly people were getting more involved and working further with marketing and production. There was an overcapacity among the many printers and at that time it was a business cycle boom. The amount of companies competing for this market had also been reduced during the years.

Although, 2005 was a good year for launching larger printing machines and establishing them on the market, people were more enthusiastic to invest then.

Rivalry

The rivalry is fierce like all kind of industries; Company C has a unique position and it feels very strong in sense of rivalry at the moment. The Company describe themselves as market leaders with almost half of all the installing and they want to guard the position and increase the sales.

“We do not have any ambition on taking 100% of the market shares, it is impossible”

The rivalry will definitely alter in the future and more competitors will come from different industries, company C predicts.


The manufacturers from the lower segments are seen as a threat by Company C. The new ones are offering new products competing with the established ones in this higher segment. One specific company is observed as very strong, with its trademark and new machines.


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Digital printing technology Company C believes their digital printing equipments today can print better than offset and that print quality of what the digital printing technology can offer fulfils the needs of the customers. The company describes that their equipments is of so high-quality; the customers get used to the products and do not look for other alternatives and the company see that as an appreciative situation.

Business model

Company C:s business idea is to be a leading manufacturer for the graphical industry and to be a sole provider for all the printers in all kind of markets. The short-term strategy is to increase the total share of digital printing to about 25% of all printed matters; it should be profitable for the printer to print 25% of its production in a digital printing press. The long-term strategy is that 50% of all the printing will be done with their machines in a 20 year perspective.


The company assume they affect the market a lot with their products and how they work in different ways. For an example, conventional printing houses must develop themselves regarding the products and how they perform, so they can compete with digital printing technology.

Company C describes benchmarking as something important, examining the market leader on what they offer and how they work. Company C knows a lot about their rivals and the competitors know a lot about the company, this keeps up the development. Company C’s have observed that their rivals have not been on their toes regarding the company’s activities and that has given the company an advantage.

Global perspective

It does not differ that much in how Company C works in different countries; it is however described as individual and can vary in some nations. The market in Sweden is for an example, very diverse compared with Germany.

"Sweden is one of those countries interested in new technologies and is very eager to try it

out, not only within printing, but all kind of areas”

The company follows a global pricelist for their products and tries to express similar messages worldwide.


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4.4 Company D The respondent at Company D is a sales director with an economic background and has been working for 10 years at the company. The company base their printing technology on xerography one like all the primary competitors.

Customers/buyers

Company D has many customers spread over several business areas. From publishing companies, copy shops, printing houses using conventional printing technology, banks, public sector, universities, insurance companies and financial companies. During the years, the customer base has varied a lot. In the future, the company predicts their largest customers will be within the graphic industry and the focus lies here.

Market

Company D sees the colour segment is growing fastest. Numerous companies in the market are “0-9” companies, i.e. they have maximum 9 employees. Since the financial situation for these companies are severe, many of them can not take loans and one of the major obstacles in this market is that they have financial problems. These so called graphic companies are some thousand and almost everyone suffers with the same problem.

“The customers can not develop and gets involved in a negative spiral”

The company feels it is very difficult to work towards the graphic industry. A deal can just break apart, because the customers do not get any funds from the banks. In the end this will drive the salesmen to be more creative and find solutions for managing the financial parts.

Company D believes fusions among different players in the market will develop it more, new applications and ideas will come then.

”They live in separate worlds today”

These fusions can be between service companies and just a regular printing house.

Rivalry

Company D think rivalry is very tough and during the years it has not altered. The ones coming up in the segment are used to battle with prices and they do not have the solutions around the machines, more focus is put on the price. The risk for a possible price war is high and that is not good for the whole market.


Company D sees firms with immense competence regarding IT as a threat, if these companies have a unique application and will get more involved in printing. Internet


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companies with great solutions will surely arrive to this market with the capacity to work better in today’s new media.

Traditional customers, as conventional printing houses are very conservative and their demands on the printing quality are still very high. These companies are also dealing with the mentioned new candidates. The new entrants concentrate more on to reach out fast to the end consumers, buying the print with the right information instead of getting jammed with focusing on the printing quality.


Company D sees itself as one of the leading manufacturers within digital printing technology. They do not have any ambitions in replacing offset printing, digital printing is working as a complement now and in near future. Some applications are working better with digital printing and others with offset. One example is printing publications or thesis for universities, where digital printing is to prefer because of the low volumes.

“Offset and Digital Printing will be around side by side complementing each other”

Company D believes digital printing provides more opportunities than offset, and the printing quality is good enough from a consumer perspective. The problem is that some customers do not consider the consumers opinion.

Business model

The respondent did not talk about this topic.

Affect other players on the market.

Company D considers its products can automate the customers’ job workflows, because some of them still work a lot manually. For these clients new business opportunities have been created and Company D thinks when working with digital printing, it can generate more profits.

Global perspective

In all the Nordic countries they work in the same way and there are no greater differences. Nowadays it is more a global market but the cultural differences affect how company D works on each market.


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4.5 Company E The interviewed person has been selling printing equipment for 20 years, started with copy machines, after that with offset and more towards the graphic industry.

Customers/buyers

Company E’s largest customers are transaction printers like banks, insurance firms and telecom companies. These companies print/produce invoices, annual reports and various kind of reports or advertisement with variable data. Others are the public sector, larger printing houses within the graphic industry, schools and universities.

“The customers are very keen on bargaining with us manufacturers to get the best price”

The company has lost a lot of customers during the years because of the rivalry. The customers have a strong bargaining power when time is not so good and sometimes because of the rivalry.

Market

The market is still very insecure and has not really opened up yet. Many deals are on hold and the potential customers are not ready to invest in digital printing, instead they are hesitating and waiting. Company E see this as a problem and it has developed to a very unexciting market to work in.

Rivalry

Company E believes one competitor to be their major rival; they want to take shares from where company E is strong and vice versa on the Swedish market. Moreover, manufacturers resemble with each other more nowadays and offer almost similar products and solutions. New manufacturers have arrived on the market and the amount of customers has reduced. For that reason the rivalry on the market and the competition for the customers has increased. On the topic of the Internet, it is not seen as a rivalry.


New entrants on the market often come from the lower segments, manufacturers of copy-printers. The major obstacles for these companies are the competence, experience and background from this graphic industry. But they are dealing with it and learning. Company E also explains that it is harder to enter a new market, than competing with some years of experience.


Company E:s future visions with digital printing technology are to concentrate on black and white. Over 90% of all printing with digital printing is still black and white today. Colour has a growth with just 6-7%, but Company E has a focus on colour too though.


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Regarding the print quality, Company E believes that it fulfills the needs, but not when it is compared with offset. The quality of digital printing quality is still far from what it can offer. Especially the end-users are satisfied, but still there are some customers hesitating concerning the print quality.

Company E considers other factors are more important; productivity, simplicity and they talk a lot about uptime, i.e. the machines should be able to operate 24/7.

Business model

Company E’s business model is to offer the best technology around and to be world leading on new innovations. The company wants to position themselves with professional users and do not wish for having their products everywhere on the market like their rivals. The focus is on solutions and to offer more than just a machine. One of the goals is to be the largest company and have a very good co-operation with the customers.


The company knows that competitors have been inspired and some times even tried to duplicate the company’s products. Company E think offset manufacturers have definitely been affected by the company’s working methods and its products. The offset manufacturers are forced to keep up their development and have to provide products matching digital printing equipments.

Global perspective

Scandinavia is one market and the working methods differ compared with other countries. It depends on that the needs are unlike and also due to substantial cultural difference. Furthermore, the product range offered by the company is the same in all nations.

“We are very interested in new technologies in Sweden”

4.6. Company F The interviewed person is the Product marketing manager for digital print presses. He has been working within this area for about 20 years. The company have been selling this kind of products for 3-4 years and the technology is based on toner.

Customers/buyers

The respondent manufacturer has a customer base all over Sweden and the total amount of customers is classified. Customers are find in all the sectors in the graphic market; advertisement companies, copy shops and printing houses. In the near future they will work more towards the larger printing houses. These were not interested in digital printing before and Company F desire to keep the current customers.


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Market Company F explains that market researches have shown that in 5 years, 50% of all the printing houses have invested in some kind of digital printing technology.

Company F believes the market is growing all the time; especially the segment for high-speed production has really wakened up. Despite the growth it is getting much tougher for the offset manufacturers and many printing houses have been bankrupted and fewer because of fusions. The most difficult part has been to work towards these clients. Company F are developing new products all the time and improving their positions on the market.

Rivalry

The company sees rivalry as something good because it boosts up the market when companies sell almost identical products. Reaching out to the market can be very difficult if a company is alone on the market. Therefore, the important factors are to manage the rivalry and learn from it. Five companies are seen as rivals for this segment and all the manufacturers have good knowledge of each other, because it is a small market with few players.

“You know the opponents sitting in the same position as you in the rival companies, they

are not enemies but you fight for the customers”

Company F is not only competing with the other manufacturers of digital printing; offset printing press manufacturers are major rivals. They work with faster intake and shorter series, i.e. printing lower volumes. On the other hand the whole graphic industry competes with TV, radio and the Internet.

“The office without paper does not exist, as it has been discussed for many years.”

Although, Company F explains that the Internet provides more information than ever before and the information generate larger volumes of print worldwide. The company expect that rivalry will increase in the future, because it is a market with growth. More business minded people developing new machines will be interested and new players will definitely arrive to the market.


Company F explains that there are very high investing costs for the digital printing equipment market. First of all a very good press must be developed and suitable for industry. After that comes the hard work around the machine, like managing a very good marketing and service organisation all over the world. Establishing these kinds of organisations is very tough and takes a lot of time. It is also important to have resources for Research and Development at the present time and these are some barriers new entrants have to deal with arriving to this section.


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“To develop a new digital printing press,

cost as much for as Volvo to develop a brand new car”

Company F has prepared well for this segment of high production printing presses. Experiences from the smaller digital printing equipments in the lower segments have assisted the company well.


Company F’s visions with digital printing technology are to be the largest supplier on the market. They believe that the products they have are one of the best of its kind and they consider the printing quality fulfils both the customers and the end-users needs.

Company F predicts Ink based printing technology like inkjet has the future within digital printing.

Business model

The respondent did not talk about this topic.


Company F thinks digital printing has contributed to the further development of offset printing. The offset machines have been so influenced that offset technology would not have survived today without the technology and inspiration from digital printing.

Global perspective

There have been a variation in how the company works here in Sweden, but it is getting more similar the European countries. Cultural differences can make the working methods unlike.


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5 Initial steps in a relationship process

In this chapter, it is described how the companies in the study work with marketing and sales. All the interviews are anonymous and so are the six manufacturers, therefore their working methods are summarized under different topics. All the results are based on the conducted interviews.

5.1 Marketing All the respondent manufacturers employs different kinds of marketing channels like trade fairs, exhibitions and advertising for reaching out to their customers. The channels are very simple for this segment, but very good defined and almost every company invests lots of money on these point activities.

5.1.1 Trade Events The trade events are very important to display the products for the market. Both national and international fairs are used for this matter and hopefully they will contribute to interest and inspire buyers. It is also an opportunity for potential customers to contact and to talk with the different manufacturers.

One specific company use trade events with doubt, particularly the Scandinavian exhibitions. They are seen as far too expensive and the number of visitors is decreasing, but if a manufacturer does not participate, they will not be recognized as an alternative on the market.

5.1.2 Advertisement The advertising is only used to create brand awareness, an image and product publicity. Advertisement is done in the major graphic industry magazines and also in magazines towards other industries as label and packaging. Also editorial texts written by journalists or editors are used instead of ordinary ads, and press releases about customers whom have invested in digital printing machines are published.

In other countries one company utilize TV commercials, but in this local market they do not advertise at all.

5.1.3 Open house/Seminars Something the manufacturers really spend money on is open houses and seminars. The seminars work to provide deeper knowledge about digital printing. Often there are special guest speakers from the academic world like professors and other researchers within this area. Potential and regular customers are invited, and also end–users buying the digital print.

Open houses are quite similar to the seminars, but more like exhibitions. In these open houses the companies describe the companies’ products and solutions. These demonstrations are often conducted at the manufacturers or rented halls.

Particularly one company arranges a large yearly open house in a European country. People from around the world are invited and it is very popular; it generates more visitors than a trade event in Sweden for the Nordic countries.


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5.1.4 Reference marketing Reference marketing is very important in this industry. Almost every potential buyer wants some kind of references about existing customers. They are provided with information on experiences with digital printing and can also contact the customers of digital print equipment for more required facts.

5.1.5 Rumours According to the manufacturers, this is a small market with relatively few actors in it. So it is important to make a good first impression and maintaining a good image.

“Rumours are spread easily and if you get a bad reputation, it will hit right back at you very fast, you can not afford to make mistakes”

Plenty of gossips are spread among the market, because almost everyone knows each other in some way and so it works as an undesirable marketing channel.

Customers buy a product and tell everyone about it, the machines, solutions and the technology. The topics functions as feedback to the market.

“The good messages are not spread as harsh as the bad ones”

People are more inclined to talk about negative things, one company claims. It can be that the machines do not operate properly, the provided education is poor and software or the network is not working.

There is a marketing of digital printing presses within the industry itself and this behaviour is very common and sees as an immense problem by the manufacturers. The targeted customers do not examine and look for their needs and the range of products on the market; instead they totally listen to other companies or persons in the industry.

5.1.6 Direct Marketing Direct marketing is applied by all the manufacturers in their marketing campaigns. It is used for creating a good relationship with the customers and to reach out to a specific target group.

One company describes the marketing towards the graphic industry as a missionary work. They have to work on the field and talk to people about digital printing technology.

“The most effective approach consists of ‘knocking doors’, an outreaching marketing method similar to a ‘doors salesman’”

5.1.7 Focus Everyone talked about variable data and personalized printing ten years ago. That is also done today, but one company clearly mark that this is not the area where the


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profit is. Nowadays earnings are towards short run, and this is taken from the offset volumes.

The main issues within the marketing are to explain and find solutions for the customers to be profitable with digital printing technology. At the moment it is also about using the necessary software for managing the whole job workflow in the digital printing process. It can be an ordering program on the web for a printing house, where the consumers are given the opportunity to purchase and control the print easily with the software application.

One company focuses on solutions regarding how to handle documents and showing the benefits with larger machines managing higher capacity. The idea is to work up in the segments and describe that it is here where profits are made when targeting to people invested in smaller digital equipments. Technical specifications are not used like printing quality in the marketing because it is good enough according to the manufacturers.

The way of marketing has changed during the years, now some of the manufacturers also invite partners delivering equipment around the machine like software or finishing equipment. This is to improve the status and make it more attracting for the customers.

It is a great difference in marketing towards a consumer market (B2C) and a business market (B2B). In a consumer market, there are more channels to use; it is a different dimension in the market for digital printing.

All kind of marketing are factors affecting the relationship between the manufacturers and their customers. They see ads in magazines and might have seen the company at a trade show; they get interested and contact the company to get a closer look at the products.


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5.2 Sales Within the graphic industry rational decisions should be made, that is what drives a business market. The situation is not like that among graphic companies. Far too many customers in the graphic industry behave like ordinary consumers as in a consumer market, where irrational decisions often are made.

5.2.1 Pre-sales The marketing campaigns are to generate some kind of suspect and prospect. Hopefully buyers will contact the centres, interested in the machines and discuss business with the salesmen.

“If someone is interested in buying a digital printing press, the company’s name should be in the buyer’s consciousness”

This is very rare though and only two manufacturers mentioned that customers do that. If the customers came to them, the companies could reduce the sales crew and that would save lots of money.

According to all the manufacturers it is an up seeking activity selling the products; knocking doors, making phone calls, being presence with customers and all this together with a combination with the marketing activities.

“It is tough working like this and it can not be more unglamorous”

When arriving to potential customers, one company describes that they are almost never welcomed. Approaching to these people then requires determination, commitment and in the end maybe a chance to sell the product is given.

It is very important to contact potential customers early, despite the fact that they do not have a need of investing in digital printing equipments at that time. In the beginning the focuses are on inspiring, giving new ideas and thoughts continuously all the time until a possible deal.

It is an enormous difference in sales compared with how it was before when the technology was new for this segment. Today the products and technology are more familiar within the market than ten years ago.

One company describes when approaching towards a more professional target group; the approach gets more professional too. Selling smaller equipments, the first contact person is a receptionist. Dealing with high production machines, the respondent is part of the management team.

Nowadays the trend is legible; the printing volumes and profitability are decreasing within the market. Solving this is to invest in machines taking care of the lower volumes and produce them with higher profits.


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5.2.2 Focus As in marketing, focuses are on all the solutions around the machines when selling the products. The focus in the sales is to continue working with the same topics as in marketing; inspiring the potential customers even more by meeting and talking to them at the different occasions, like the open houses or just inviting them to the companies.

5.2.3 Pricing Some of the companies have a global pricing list which is followed worldwide, but it can vary due to bargaining and other circumstances. For an example, the customers get free education to manage the machine. Other discounts could also be applicable. According to two of the manufacturers; 90-95% of the buying of digital printing presses, are through leasing and there is no place for paying with cash. But there are customers paying with only cash, several of them have loads of money, two other companies explain. How the deals are paid by the customers can be summarised like this;

- Leasing, with banks or finance companies (both own and collaborating companies with the manufacturers).

- Cash, the customers buys the machines with cash.

- Rent, renting the machines is not so ordinary, but it can happen sometime.

The most common one is buying the machine through leasing.

5.2.4 Product The products offered from the different manufacturers are quite similar, so are also the services and all the solutions around the machines. Whole concepts are therefore offered when the customers buy the machines. The concepts vary among the manufacturers and can include service, education about managing the digital printing press, consumables like toner or paper and software applications.

5.2.5 After- Sales The major efforts are within after sales, when the machines are sold and in production. This is done in different ways, but all of companies have almost the same goals with it. One company believes it work the most after sales compared to the rivals and everyone mentioned that it is all about maintaining the relationship with the customers and strengthen it.

“A major part of the missionary work is to help the customers to sell services”

They all work with maintenances and also with the customers’ sales personal; educating them how to handle their customers ordering the print. It can be about how to sell specific solutions, how to add value and continue to inspire them to be business minded.

Another company explains how it prepare the installation of the equipment, site survey, i.e. examine the premises (ventilation, air-condition, heat or cool) and start a


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routine for ordering consumables; educate the personal and making sure the customers can handle the machine by themselves.

One particular company has partners offering certified technicians working locally in Sweden and the manufacturer also cooperates with consulting companies for service and support, managing hardware support. Regarding software issues, they have an own special analytic crew or a partner company.

The after-sales relationship is seen as very important by the manufacturers. It is generally very good between the salesmen and the customers because of the fewer buyers in the graphic industry nowadays. Although, very much depends on the salesmen at the different manufacturers and it is still very individual.


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6 Analysis

This chapter consists of an analysis of the obtained results.

6.1 Analysis To provide conclusions for the main problem and questions for this master’s thesis, an analysis of the obtained results has been made. This analysis consist of the authors own interpretations and discussions of the results related to the objective, theory and other researches. The analysis is structured with the five forces framework and in the end it examines how the manufacturers market and sell the digital printing presses.

6.1.1 Industry Manufacturers strongly believe in the future market for digital printing equipments for professional production considering the ongoing digitalization. Internet and a more digitalized world have implied increased information flows, and thus the need to print is greater then ever, trashing early assumptions made about the utopia of the paperless office. Moreover workflow benefits from using the Internet have made it easier to handle the whole printing process online, resulting in increased flexibility, lead times and customer reach. Some manual processes within printing have already been simplified and automated as printing proposals, adjustments and approvals are being processed electronically between manufacturers and customers. Internet is therefore treated as an enabler by the manufacturers. However, Internet at the same time also provides buyers with easier access and ability to compare products and services from different manufacturers, intensifying the competition. As the traditional and mature graphic industry have been facing modest growth, financial problems and fierce competition, digital printing manufacturers have now started to look beyond conventional business models and target new customers.

6.1.2 Competitors All manufacturers in the Swedish market are foreign players and do not deploy local production or Research & Development of equipment as they leverage on existing operations from Europe, Middle East, USA and Asia. Only sales and service of the machines are conducted in Sweden. Some of the manufacturers are multi industry companies leveraging on very strong global brand awareness, already established in the consumer market. Responding to the industry conditions, we can in the figure below (figure 6-1) see a differentiation in market positioning among the manufacturers. Only one has chosen to provide full market coverage while some emphasise on other segments. All players are present in the most competitive graphical segment, which is probably related to previous market boundaries, knowledge and credibility building. Smaller players are looking for complementary target customers, with less competition. However these segments are more fragmented to reach and probably have different needs in regard to service offerings and marketing.


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The customers of the companies in the survey are not exclusively present in the graphic industry, but are spread over different markets; graphic industry, public sector and other niche areas outside the graphic industry.

Figure 6-1. – Targeted customers, Source: Malhotra

In figure 6-1, manufacturers and their addressable markets are shown, which visualize the different market positioning tactics in the industry. It is a general comparison between the different manufacturers and describes how they compete for respective market/area with each other. The customers are divided into the markets as shown in the figure 6-1. The first three (1-3) markets, which are inside the dotted circle in the figure, compose the graphic industry. For an example, one can see from figure 6-1 that Company E and Company D are major rivals, competing for the 3-6 markets; printing houses, transaction printers, universities and the public sector. Company A and B are mainly targeting new customers outside graphic industry because of the high competition between the six manufacturers. For these two companies the rivalry inside the graphic industry (dotted circle in figure 6-1) is regarded as fierce, therefore finding own new niche markets are essential to survive when the graphic industry is having financial problems.

6.1.3 Buyers Theoretically the graphic industry segment should be the one facing the highest pressure in regard to exercising buying power as that segment withholds the highest rivalry and supplier options. However manufacturers claim that buyers are quite stiff in their evaluation of different suppliers, which really emphasise the importance of long term relationships as a competitive advantage in this industry. Respondents in the study explain that buyers do not actively look for other alternatives in the market. If they would expand their views on supplier options, they could use their bargaining power to reduce the prices and obtain better deals. The manufacturers in other hand of course seek to tie up the customers with products that force them to buy their specific consumables. This indicates that other “profit pools” are essential to protect as profits are generated from consumables, services and print job applications rather from the digital printing press.

1- Publishing companies, newspapers 2- Copy-shops 3- Printing Houses, (conventional

printers like offset) 4- Transaction printers (banks,

insurance companies, financial companies)

5- Universities 6- Public Sector 7- Other niche companies


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6.1.4 New entrants The manufacturers are very optimistic about the future development of the industry and new manufacturers entering this segment is one factor confirming a promising growth potential. One could also argue about differentiation in entry barriers characteristics in regard to different targeted segment. Establishment in the graphic industry segment would require greater knowledge, experience, complexity and operational structure to service such large scale customers in comparison to the other segments. Although, the new entrants can abolish the experience obstacle by hiring persons with experiences from either the graphic or the digital printing press industry. A confirmation on that is just to observe the respondents and their backgrounds.

Nevertheless new entrants are mainly arising from the lower product segments, represented by manufacturers of smaller digital printing equipments, i.e. digital printing machines that produce smaller volumes. They are now introducing new equipment in order to expand their production capacity to the high tear volume segment. New entrants that use inkjet technology have a potential ability to establish them self in marketplace. Combined with an already existing strong brand would significantly increase their chances to break through.

Other IT companies are as well considered as threats for this industry. It is just a matter of time when they get established, as printing equipment becomes a commodity and the services dominates the means of competition. Parallels could be made to ongoing transformation of the telecom industry. IT companies have the IT infrastructure expertise to develop applications etc as a value added service to the manufacturing which the either could partner up with or acquire. Hypothetically, if these companies get more involved, the manufacturers are dealing with competition regarding the solutions and applications surrounding the printing presses. These IT companies can surely develop universal applications suited to be used in different digital printing presses, and thus unlock dependences established. Manufacturers today have applications working only with its own machines, and can not be used in other printing presses manufactured by other companies. The mentioned IT companies can merely concentrate on the applications and cooperate with another company managing the print; this will provide them an advantage over the manufacturers. To handle the new entrants, the current six manufactures must have countermeasures, i.e. they have to reply and act to the new threats. The existing manufacturers are doing that by keeping a watch all the time, developing the products and solutions furthermore and also by maintaining a strong relationship with the customers. Customer loyalty and development of technology create barriers to enter (Porter, 1980).

Why do new entrants want to enter this digital printing market? The answer to that is the prospective growth and new business opportunities within digital printing. In an online journal written by Romano (2006), it is also confirmed; digital printing opens new markets, offers new services and generates new revenue streams.

New entrants are also welcomed by some manufacturers, because they can open up the market and push present manufacturers or other players to develop even more.


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6.1.5 Digital printing technology Most of the manufacturers consider the digital printing quality is good enough from their perspective. They believe many customers are still very skeptic about the printing quality, but that it fulfils the consumer buying the digital print. This is interesting when researches as Mejtoft’s (2006b) shows that it do not fulfill the end consumers’ demand.

Comparing with offset printing, digital printing can not compete with it regarding the quality; however other advantages are mentioned which are described in the theory chapter. Therefore, the manufacturers see digital printing more as a complement for offset.

Inkjet is the future technology within digital printing and has the most potential, according to some respondent companies. These are some thoughts that can be related to what Romano (2006) has described, and it can also confirm that these are similar trends worldwide.

6.1.6 Marketing and sales It is evident that the different manufacturers try to create a brand awareness and image for themselves with marketing. If they do not exploit themselves and participates on the trade events or organize other marketing activities, they will not be recognised on the market and no one will think of them when buying a digital printing press. Therefore, they are obligated to attend those events or arrange different activities, even if it cost much money. The marketing channels are limited and few, and this is what indicates it is a business market they are competing in.

Focuses are on creating ideas, adding value and how to make the customers profitable. Figure 6-2 shows a general order of rank for the arguments used in marketing and sales, where DPT stands for digital printing technology.

The main focus is to describe how the customers can be profitable utilizing digital printing technology. After that come the solutions and software applications handling the job workflow for the digital print. Of curse, information regarding the digital printing technology is focused, but not in the same proportions as the two other arguments.

Figure 6-2. – Rank of arguments, Source: Malhotra

Plenty of effort and money are put into marketing. It works as a start point in a quite long process for selling the digital printing presses to the buyers. Together with sales it is used to create a relationship with the customers, a long-term one,


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otherwise the manufacturers do not make any profits. When the machines are on the market in production, they generate money for the manufacturers; the utilization of consumables, service and the applications handling the digital printing.


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7 Conclusions

This chapter summarizes the conclusions regarding the main problem and questions for this thesis.

The main objective of this thesis was to investigate the strategies the manufacturers of digital printing equipments were using to reach out to their market.

One can see from the results that marketing and sales in this industry are the initial steps towards a long-term relationship with the customers. Service agreements and consumables provide most of the revenue for the manufactures. So every beneficial customer is very important to make the manufacturer profitable. The real work starts when the machine is sold, after-sales, then the manufacturers are required to continue to work with and assist the customers to sell and market their products, i.e. the digital print. This is a way of helping the customer to be profitable with the digital printing technology.

Experiences from the study show that the competition is tough in this segment for high production of digital print, especially in the tensed graphic market. Despite the fact that all the manufactures work very similar, it is important for them to differentiate themselves from each other and find own niche markets or solutions. Roughly everyone base their machines on identical technologies and offering almost the same products and printing quality. In other words, it is the solutions surrounding the machines that are distinguishing the manufacturers from each other.

Obviously the manufacturers of digital printing equipment are influencing the industry with factors like marketing, sales and strategy; new business ideas and applications are put in the customers and the end-users minds and widen their views on digital printing. How the customers can be profitable, how they can develop new solutions and make the workflow easier is mentioned all the time.

Naturally the other players on the market will start thinking towards new business orientated solutions and models instead of just concentrate on selling a single product, in this case a print.

If the majority of the targeted customers are very conservative, which it appears from the study, then being more business minded can really change their thinking and make them realize how to survive in a fast developing world today. The digital printing technology seems to be good enough at the moment and it is more important to choose a modern business model. One can draw the conclusion that educating and inspiring the customers are the intention of these manufacturers.


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8 Suggestions on further research

The last chapter of this thesis is completed by suggesting topics for further research.

All the data and experiences from this thesis are from six manufacturers of high production digital printing equipment. Therefore, the study is based on a perspective from them and the conducted study is a general insight on how these companies work with marketing and sales. For further researches it would be interesting to examine how the offset manufacturers are working, and how digital printing has influenced them, so a comparison could be made.

Furthermore, it is important to continue to study the other actors in the value system for digital printing.


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9 References

Backman, J. (1998). Rapporter och uppsatser. Studentlitteratur.

Bell, J. (1999). Doing your research project, Third edition. Open University Press.

Digital Printing. 9th edition, 2005, OCE, ISBN 3-00-001081-5

Johansson, K., Lundberg, P. & Ryberg, R. (2001), Grafisk Kokbok.

Johnson, G. & Scholes, K., (1997). Exploring Corporate Strategy, 4th edition. Prentice Hall.

Kipphan, H. (2001). Handbook of Print Media, Technologies and Production Methods. Springer.

Kotler, P., Armstrong, G., Saunders, J. & Wong, V., (1999). Principles of Marketing, third European edition. Pearson Education Limited.

Lantz, A. (1993). Intervjumetodik. Studentlitteratur AB.

Mejtoft, T. (2006a). Strategies for Successful Digital Printing. Journal of Media Business Studies, Vol. 3, No. 1, pp. 53-74.

Mejtoft, T. (2006b). Perceived Satisfaction by Customers in the Digital Printing Value System. Paper presented at TAGA’S 58th Annual Technical Conference, March 2006, Vancouver, Canada. Paper accepted for publication in TAGA 2006 Proceedings.

Porter, M. E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. Free Press.

Porter, M. E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. Free Press.

Porter, M. E. (1996, November-December). What is Strategy?. Harvard Business Review, pp. 61-79.

Porter, M. E. (2001, March). Strategy and the Internet. Harvard Business Review, pp. 63-78.


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Porter, M. E. (1979, March-April). How competitive forces shape strategy?. Harvard Business Review, pp. 137-145.

Romano, F. (2006). Status of digital printing. Digital Printing Council. Retrieved May 1, 2006, from http://www.ondemandjournal.com/dpc.cfm

Romano, F. (2002). Status Report on digital color printing. Retrieved February 16, 2006

Internet:

[1] Strategy - what is strategy? Retrieved January 24, 2006, from http://www.tutor2u.net/business/strategy/what_is_strategy.htm

[2] Digital Printing and Variable Data Printing. Retrieved February 2, 2006, from http://www.anro.com/commercial-printing-capabilities/digital.htm

[3] InkJet Technology. Retrieved February 2, 2006, from http://www.inkcartridge.com/inkjet.aspx

[4] Digitaltryckta etiketter. Retrieved April 6, 2006, from www.stralfors.se/sharp/ASMFileObjects/Digitaltrycksbroshyr_Etikett_svenska_2004-01.pdf

[5] Offset printing. Retrieved April 18, 2006, from http://science.howstuffworks.com/offset-printing.htm/printable

[6] Retrieved April 18, 2006, from http://www.cela-grafiska.se/pages/default.asp?SectionID=1249

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Manufacturers of Digital Print Technology – a Marketing ... · Manufacturers of Digital Print Technology – a Marketing and Strategy Analysis VINIT MALHOTRA Master’s Thesis in