Marketing Services: Moving from the Red Ocean to the Blue Ocean
At GRAPH EXPO 2010, print service providers are being exposed to the world of new media like never before. As the Graph Expo 2010 theme states clearly this is the “Next Generation of Print” The question is, how do print service providers use this new generation to their advantage.
In 2005, W. Chan Kim and Renée Mauborgne published a book entitled Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. This international bestseller considers how technology and globalization are making it increasingly difficult for businesses to compete. It explains that cost-cutting strategies can only take a business so far, and explores why owners and managers must implement a series of actions to open up new market spaces. While this book was originally published 5 years ago, it still depicts the state of today’s printing industry.
Kim and Mauborgne divide the market universe into two types of oceans, namely red and blue. In the red ocean, companies attempt to outperform their rivals to obtain market share. Products become commodities, and fierce competition turns the ocean bloody. The red ocean could represent the traditional printing industry. In contrast, the blue ocean consists of companies that have identified new products and services in an uncontested market space. Within the printing industry, the blue ocean is represented by savvy marketing service providers. These businesses have sought “untapped” market spaces. They are creating new demand and the opportunity for highly profitable growth. For these entrepreneurs, the competition is irrelevant because the rules of the game have been reset.
Even for companies that are currently swimming in the blue ocean, a key message is that the underlying technologies typically already exist. The idea is not to create new technologies, but to differentiate oneself by linking existing technologies to the things that buyers value. Becoming a blue ocean company doesn’t mean venturing into distant waters—it means exploring adjacent markets that leverage core competencies.
New Boundaries Driven by New Media
One of the fundamental principles in building a blue ocean strategy is reconstructing market boundaries. You must seek blue oceans in areas where the competition is not looking. Print service providers must start viewing their competitors very differently. The true competitor isn’t the printer down the street, but the latest media technology. Boundaries must extend beyond print and into the realm of true multi-channel communications that are linked to changes in consumer media consumption habits.
According to Internet World Stats (www.internetworldststs.com), global Internet penetration surpassed 25% in 2009. In addition, the media options aren’t just online—they include print, social, and mobile communications too. As of July 2010, Facebook reported having more than 500 million active users that were spending 700 billion minutes a month connecting with friends. YouTube views currently exceed 2 billion every day. And then there are mobile communications. Almost every activity that we partake in during a typical day—even eating and sleeping—is conducted while our cell phones are within reach. According to data from wireless association CTIA, 86% of U.S. adults currently own a cell phone. What’s more, these phones are getting smarter all the time. Of the roughly 265 million mobile phones currently in use in the United States, more than 240 million of these handsets are text-enabled. As of May 2010, over 49 million smartphones were currently in use. During 2009, almost 5 billion text messages were sent every day.
Marketers are seeking partners that will help them reach today’s unreachable consumers and communicate across multiple channels by engaging technologies. To move away from the red ocean of bloody competition, savvy service providers are reconstructing their boundaries and providing cross-media service portfolios. Let’s look at some examples.
VistaPrint: Aggregating Small and Medium-Sized Business Volume
Within the printing industry, VistaPrint has demonstrated the ultimate blue ocean strategy. While other printers were fighting it out in the red ocean of print procurement in Corporate America, VistaPrint aggregated volume and made high-quality professional print and multi-channel marketing services affordable for micro, small, and medium-sized businesses. With leading-edge technologies, the company offered Internet capabilities that had previously not been available for a reasonable cost. The results speak for themselves. In its July 28, 2010 earnings release, VistaPrint reported revenues of $670.0 million, marking a 30% increase over revenues of $515.8 million during fiscal year 2009. Gross margin for the full fiscal year was 64.2%, compared to 62.8% in fiscal 2009. Furthermore, the company’s services portfolio is continually expanding to meet the needs of small and medium-sized businesses. VistaPrint provides a full range of capabilities, including design services, e-mail marketing, simple Web design tools, and the ability to track and monitor results.
Reynolds DeWalt: “Web to Publish”
Reynolds DeWalt is a 62-year-old commercial printing company with a strong pioneering spirit. Since making its first investment in production digital color almost 10 years ago, Reynolds DeWalt has never looked back. Today, the company has iGen3, HP Indigo devices as well as an array of cross-media software. According to Scott Dubois, Vice President of Cross-Media Services and Marketing, 2009 was the first year that cross-media services surpassed offset revenues. Last year, almost 60% of the company’s revenues came from digital-related services. In addition, digital-related services increased by 85% between 2008 and 2009.
Reynolds DeWalt works with its clients to provide a single-source solution that provides a unified and recognizable message through a cross-media platform, including:
- Personalized Direct Mail
- Personalized Microsites
- Custom Web Portal Development
- Text Messaging
- Mobile Applications
- Traditional Media
- Podcasting
By positioning itself in an uncontested space, Reynolds DeWalt is redefining Web-to-print as Web-to-publish. DuBois stated, “Web-to-publish is a bigger concept. We can support an organization through the easy publication of print, e-mail, SMS, and other media in a cost-effective and on-demand portal. Through customized Web-to-publish applications, our clients benefit by retaining complete control of their brand, content, time, and costs. Portals can be customized with branding and user rules to fit almost any workflow.”
The Ace Group: Leveraging Quick Response Codes
The Ace Group, Inc. (New York, NY) has become an industry-leading marketing and print solutions provider. The company’s solutions include innovative tools such as QR (quick response) codes, pURLs, online collateral management systems, Web-to-print, distribute and print, interactive advertising, and 1:1 marketing. Val DiGiacinto (Vice President of Sales and a Partner from the Ace Group) worked with Jeremy B. Edelman (Senior Coordinator of Retail Marketing for the NBA) to take a shot at experimenting with QR codes.
The 100,000 fans in attendance at the 2010 NBA all-star game were invited to scan the QR code that was displayed on the 3,500+ HDTV screens on the main concourse level of the stadium after the first quarter, during halftime, and after the third quarter.
Once an attendee scanned the QR code, a coupon was sent to his/her phone to receive a free All-Star gift at the main team store in the stadium. This campaign was completed within a six-hour period. The NBA exceeded its goals for this campaign and distributed all of the free gifts available. While there were no direct sales tied to the campaign, more than 10% of attendees actually pointed and clicked on the QR code.
The Bottom Line
To transform their businesses, print service providers need to take the messages from W. Chan Kim and Renee Mauborgne seriously. Companies steeped in traditional printing business models must embark on a mission to create an “uncontested” market space. This might mean focusing on a specific vertical market niche or working with new and existing clients on business models that leverage print, mobile, social, and online tools. In today’s new media economy, it is time to redefine your services portfolio to make competitors irrelevant to their prospects, create and capture new demand, deliver increased value to clients, and ultimately build a healthier business. If you haven’t read Blue Ocean Strategy, now might be a good time to buy the book. If you already own it, this might be a good time to reread it!