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It’s All About the Customer

The Importance of Market Research

By Barbara A. Pellow

A number of companies have failed based on the fact that they missed the market. In some instances, companies did not observe that the needs of their current customer base were changing and in others there was an inability to realize that targeting a new market opportunity was the key to survival. There are a number of examples of marketing blunders from both large and small companies.

In 1985, concerned that the Pepsi Challenge was having a major impact on market share, Coca-Cola formulated New Coke. The company gathered focus groups to compare Pepsi and New Coke in blind taste tests. The new formula consistently beat Pepsi, and Coca-Cola concluded that it was a winner. Within a few hours of the rollout, it was clear that something was amiss. Thousands of complaints flooded the company in the weeks after New Coke hit the streets and within 90 days, New Coke faded from the shelves. The error Coca-Cola made was that, while the focus group leaders had asked whether tasters liked New Coke better than Pepsi, they never bothered to ask people how they would feel if the old Coke was taken away.

In the early 1970s, computer scientists at a California research center, Xerox PARC, built a machine, the Alto, which is considered to have been the world’s first personal computer. PARC, in fact, was the theoretical spawning ground for the then-revolutionary notion that the immense power of mainframe computers could be brought to the desktops of individuals. PARC conceptualized the notion of the desktop computer long before Apple and IBM launched products. It laid the foundation for Microsoft Windows with a prototype graphical user interface of icons and layered screens. PARC also pioneered many other computer firsts—a new word processing language, a local area network through which computers could talk to each other, a laser printer, and a mouse for moving characters on the computer screen. But despite PARC’s many industry altering breakthroughs, Xerox failed to understand the market potential of the technology because it was not focusing on customer needs and market trends. The company lost billions of dollars of potential income, as later became strikingly evident.

You might say, "What does this have to do with me? I’m just a printer or a business communications service provider." These are both examples of companies that lost sight of the most fundamental marketing principle—Know Your Customer.

A marketing-oriented firm is one that allows the wants and needs of customers and potential customers to drive all the firm’s strategic decisions. The firm’s corporate culture is committed to creating customer value. The rationale is that the more a company understands and meets the real needs of its customers, the more likely it is to have happy customers who come back. And in order to determine customer wants, the company needs to conduct some form of market research as well as consistently reassess market trends. If done correctly, it will provide the company with a sustainable competitive advantage.

Positioning for Strategic Advantage
Over the past several weeks, we have spoken to a number of firms that have experienced double digit revenue growth during 2005. And they all have some common characteristics. Their market growth was linked to a focus on a well-defined target market. The firms developed and delivered products and services that met customer needs in selected market segments. They had solid value propositions, and they were continually reassessing their offerings to maintain a competitive advantage.

ColorCentric Corp., founded in 2002 and based in Rochester, N.Y., has grown rapidly into a world-class digital full-color printing organization. Revenues doubled in 2005, and projections are that they will double again in 2006. When asked about its strategy for growth, president and CEO John Lacagnina says, "We have built our business around Internet printing. We want to be the Intel Inside for Internet sites that are focused on delivering print oriented products and services." ColorCentric is serving as the print utility for printing anything, including books on demand, photo albums, greeting cards, postcards, direct-mail pieces, and marketing materials, in run lengths of one. Its business focus is establishing strong partnerships with all of the Internet companies that have store fronts in place for delivering these services to either consumers or businesses.

According to Lacagnina, "Our value proposition is clear. ColorCentric provides digital printing solutions to industry-leading companies who rely on our knowledge and expertise to help them create a strategy that will allow them to leverage state-of-the-art technology and increase their, and their customers’, ROI and profitability. It is all about improving our customers’ profitability and we all benefit." When Lacagnina examined the market, he designed his operation around a philosophy of automation and lean manufacturing—terms usually not used in the printing industry. The ability to produce one of anything requires this level of operational excellence and underscores ColorCentric’s vision.

Motheral Printing
Last year revenues climbed from 30.5 million dollars to 34.8 million dollars—a 14 percent increase—at Motheral Printing. The company’s roots trace back to 1934 when Fitzhugh Motheral and his wife, Ella, purchased the C.C. Paxton Printing Company. Today, the third-generation of the family prides itself on staying on the bleeding edge of technology. While Motheral is making heavy investments in both equipment and software, these investments are executed with a clear focus on a specified target market. The primary application focus at Motheral Printing is short- to medium-run finished products.

While some business communications service providers focus on vertical industry segments such as manufacturing, insurance, or financial services, Motheral has chosen a horizontal application focus. With its technology infrastructure, the company can serve diversified markets with common characteristics and maximize operational efficiencies.

COO David Motheral indicates that the company’s strategy is clear. He is giving the customer the value of time. In some instances, it is time to market and in others it is time to prepare content. According to Motheral, "Publications [catalogs and magazines] are applications where time is of the essence. Magazine publishers want to maximize the time that they have to sell ads and minimize the production window. Cataloguers want to change prices up to the last minute. With our workflow automation, we have put our customers in the driver’s seat and let them make last minute changes without disrupting our operation."

Motheral stays tightly linked with customers because the company has integrated its workflow with the actual customer operations via the Internet. According to Motheral, "Customers anywhere benefit from the InSite software we use by having access to real-time knowledge of a job’s status within the prepress environment at any time. Web-based proofing shortens lead times and lowers costs to our customers. All job information is visible in real time and accessible from anywhere via the Web. With InSite, you can reduce the number of hard proofs your customer requires. Most importantly, it eliminates errors and puts the customer in control."

Specialty Printing
Established in 1938 under the name LeFebvre Intergraphics, Specialty Printing is a high-volume direct-mail print facility that is privately-owned and operated. With about 150 employees, the shop has a nationwide consumer-oriented customer base including BMG Music, Citibank, Linens ‘n Things, and Omaha Steaks. Revenues at Specialty Printing climbed more than 50 percent in 2005, to 42.3 million dollars.

President Adam LeFebvre says, "Our target market is direct-mail. Our best prospecting comes through our mailboxes." Because timing is everything for direct marketers, Specialty Printing’s value proposition emphasizes the fact that it is a partner that can be trusted to meet tight deadlines with quality work. There are a series of quotations on the company’s Web site from its senior management team that sum up the value Specialty Printing is delivering to customers: "Our philosophy is get it done fast. Get it done right. Period."; "Think of us as the big guy with the personal touch. That is what sets us apart."; "When we say we will do something, we deliver. We’ll never let you down."; "When it comes to turnaround, we are the best in the country."

According to LeFebvre, the 2005 growth can be attributed to expanding capacity and improving quality to meet customer demand. The company added a 40-inch Heidelberg press with an aqueous coater, a Goss Sunday press, and an additional NexPress. These significant investments were made to ensure that Specialty Printing exceeded customer expectations for both quality and turnaround.

The Bottom Line
Commercial print operations have certainly not been immune to failures. There have been blunders in our industry comparable to Coca-Cola and Xerox. At the end of 2004, there were just under 31,000 establishments, down from 37,000 in 1997, according to NAPL and the AF Lewis Database, a sister company to GAM.

Firms like ColorCentric, Motheral, and Specialty Printing have focused on targeted market opportunities and have designed infrastructure to give customers what they want, when and how they want it. They are serving up more sophisticated offerings, and providing timely, cost-competitive delivery. They are upgrading equipment and software and automating and streamlining workflow in conjunction with meeting the needs of identified segmented opportunity. The end result for those focused on the right target, with the right value proposition, and the right product, has been a business that is growing substantially faster than the industry. The success of these companies proves the validity of the claim that marketing is all about the customer and that customer-centric marketing is critical to business growth.

 Mar2006, Digital Output

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