Cronin is right. In business, as in life, we make routine choices that reflect our day-to-day priorities. We balance those with more thoughtful choices that affect our long-term success.
Changing Market Spawns Options
Ivars Sarkans, president of Los Angeles consulting firm Sarkans & Associates, says more trade manufacturers will have to choose between distributors' happiness with a trade-only sales approach and other options for growth and long-term survival. "The choice is becoming easier," he says, "as more distributors buy from manufacturers who also sell direct, as more distributors own or operate ancillary production or service facilities, and as adherence to forms industry traditions diminishes. There will be a gradual disappearance of a distinct forms industry."
Printing industry experts, including Cronin and his Open Approach partner Ron Seavey, former vice president of sales at Wallace Computer Services, agree on the benefits of multiple options for both manufacturers and distributors. While there are no "guarantees" for distributors' happiness, there is great hope for the printing industry.
"I think it's healthy for trade manufacturers to go to multiple channels," Seavey says. "It is becoming more and more accepted. Most distributors sell non-forms related products, the manufacturer has sold direct for years, and [distributors have] learned to live with it," particularly in the commercial printing and direct mail markets.
The trade manufacturers' support of multiple channels almost always has existed in the commercial and promotional printing segments, Cronin and other experts say. Cronin raises the question: Why is it difficult for trade manufacturers to choose multiple channels for traditional document products? "Why can it exist in one segment and not the other?" he asks. That's because the market for making, buying, selling, and using print has changed dramatically. "These changes require all the historic norms of our business to be challenged," Cronin says. The changes exist to ensure returns on future investments in time, money, equipment and human resources.
Need for New Marketing Methods
Trade manufacturers and distributors will have to work in new ways that allow them to control their destinies. Sarkans says that in specialized printing markets such as digital printing and direct mail, manufacturers must have access to distributors who can sell these products to justify the sizeable investments required for manufacturers to become credible "mainstream" suppliers. "In these segments, most trade manufacturers have to reach out to new distributors and select end user groups to generate the volume needed to support their investment in equipment, systems and marketing programs," he says.
Reaching out to new distributors and customers can and should be a highly selective process. Trade manufacturers should selectively pursue marketing methods as long as they avoid conflict with distributors and remain sensitive to their needs and concerns.
Sarkans says trade manufacturers have a variety of options to broaden their market access:
* Advertising agencies
* Associations
* Buying groups
* Designers
* Exclusive marketing alliances with distributors
* In-plant print shops (takeovers jointly with a distributor)
* Mailing houses
* Manufacturer representatives
* Service bureau operations
* Software developers
* Internet
Leveraging the Internet
The internet is a highly effective enabler of the print manufacturer-distributor sales business model. Ivan Verheye, president of Itasca, Ill.-based supplier Xeikon America Inc., says most of the success stories in digital printing and direct mail have one thing in common: the web.
"Successful companies have invested in a web portal that allows them to communicate with the print buyer without costly customer service and sales follow-up associated with traditional print provider models," Verheye says. This often requires beefing up a traditional printer's IT and data management capabilities and infrastructure, he says, but rewards them with unsurpassed visibility and opportunities.
Many companies integrate a digital printer into their workflow, Verheye says, because it's the traditional manufacturer's experience and knowledge that offers customers the often sought-after "total solution."
Alpharetta, Ga.-based manufacturer Wise Business Forms Inc. presents a non-traditional solution to its distributors through the internet. Jeff Prettyman, executive vice president, says the company is sticking to its strategy of using its existing distributors and the internet to introduce its NextWave technology. The company's NextWave division has developed a "killer" application called VIP Page™, which integrates custom digital print capabilities with the internet.
VIP Page is a web-to-print tool that allows end customers to create custom collateral pieces online and control corporate identity at reduced costs. It's uniquely suited to meet the needs of mid-sized to large companies that have multiple branches and disparate sales, marketing and customer service departments. It's ideal for the automotive, retail and financial services markets.
Wise Business Forms plans to use its distributor network to reach out to more customers. Distributorships, with which the company has long-standing relationships, are its lifeblood, Prettyman says. Although Wise Business Forms has no plans to use another reseller environment, it has a marketing plan for its distributors to sell VIP Page. The plan consists of multiple components, including market identification, integrated direct mail and email campaigns, and sales support. "Distributors are not sure what to look for or when to sell a web-to-print application," Prettyman says. "We are giving them tools to talk about it on every qualified sales call." The company also is working with at least three of its largest distributors to target their print suppliers.
Real Value Revitalizes Print Market
Cronin and industry experts say the future of the printing industry depends not only on the way manufacturers and distributors conduct their own businesses, but also on relationships and agreements between manufacturers and distributors who decide to work together.
So how can a trade manufacturer imitate Wise Business Forms and work with distributors on both "old" and "new" products? Sarkans advises trade manufacturers to segment their distributor base and then analyze operations of their top 25 to 100 distributor clients and prospects. Manufacturers should identify ways the distributorships sell products, their internal production or print-related service capabilities, their customers and buying habits. "The distributor segmentation process allows identification of opportunities and constraints to selling new products," Sarkans says.
Cronin cautions that a manufacturer-distributor strategy should look beyond what's good for one customer and, instead, focus on providing value to a vertical market or a "like" group of customers. Next, manufacturers should educate distributors about their products so distributors can effectively talk to their customers. "It's also important to build enough incentive into the compensation for these new introductions to create enough interest to pursue them," Seavey says.
In the future, printing orders will come from a combination of familiar sources such as large accounts and resellers, and customers' need for communication vehicles and transactional documents. As the list of major direct print providers catering to large customers continues to decline, there's an opportunity for trade manufacturers to offer services across all print categories. Also, the large customers will rely on the same scale of capabilities offered by the majors and will seek new services and solutions not currently available. In addition, resellers such as commercial printers, quick printers and office supply retailers will continue to be revenue-generating resources.
The communication and transaction needs of tomorrow will be met by those relationships that "marry" the manufacturer-distributor-buyer-user chain to technology that speaks to a uniquely printed page.
Contributing Editor Dennis McGarry, CDC, is vice president
of manufacturer and technical programs at DMIA. Email him your comments at dmcgarry@PSDA.org.
