It’s not about the machines, dammit!

 

lego-machine

A series of conversations that I had last week shed some light on the source of some of the difficulties that printers have with the whole concept of marketing. I wrote an article recently for the SMB Newsletter about the need to delineate between sales and marketing.  The recurring theme in last week’s discourse is another big monkey wrench that printers throw into the gears – it’s the idea that he who has the best toys should win.

I can certainly sympathize. During my years as a printing company owner, I occasionally fell victim to the Field of Dreams mindset: If you buy it (the latest whizbang technology), they (customers) will come.  While there is  a very good case to be made for investing in equipment that reduces operational cost or adds a marketable product line, it’s generally not a good idea to justify an equipment purchase because you think the machine is “just too cool.”

That’s really not what I want to discuss in today’s blog post, though.  The two companies I talked with last week had made sound investments in equipment, at least in terms of efficiency.  I can also speculate that when the purchases were made, there was a studied conclusion that the volumes required for the machinery to make a margin contribution would be available. Both companies have seen a reduction in volume in recent years.  No mystery there. Now the goal is to “fill the presses” and the rationale revolves around low cost of production.

Here’s the logic:

“I have state of the art machinery. There’s no way that my competitor can have a lower cost than we do.”

And the rational conclusion: “We have a sales and marketing problem. The phones aren’t ringing.  We need to do something to drive sales and fill our capacity.”

So where’s the problem?

Deep sigh . . . it’s complicated. Part of the difficulty is philosophical, the idea that the market exists because the means of production exists. Coupled with the conviction that “our toys are best,” the solution that presents itself first is a price strategy.  This makes sense especially if you presume that there’s always a market for a product at some price.  There may be some truth to that assertion, but the price may be below the cost of operation.  Even if this cost is low, no one remains a low cost provider for long. Ultimately, filling the capacity may just require more energy to go broke.

A natural inclination is to blame the sales and marketing effort and to scramble the two together and say that it’s just not working.  There may also be some justification to this conclusion.  In a price competitive market, when owners focus on filling the machinery, the first inclination is to use the old “price, quality, service” strategy; and then to fall back on price because the other two are meaningless to the customer. Besides, if the owners say that we have the best machinery, we can certainly give our customers a “competitive” price, right? I’ve written about the need for product differentiation before (see Just What is the Message?), and the message may be a partial solution. It’s not a fix, though, because the problem hasn’t been correctly identified.

Facing Reality

The marketing and sales difficulties are actually symptoms.  The real problem isn’t a marketing problem, it’s a market problem. There are too many machines and too little market.  Your customers could care less about the machines, or your need to fill them.  Their interest lies with the product that’s produced and whether it works for them.  If they can take advantage of lower prices that result from overcapacity, they certainly will; especially if they’re not offered any other attributes to differentiate one supplier from another.

Reality is that marketing can’t cure a problem like this.  A good marketing plan has to begin from the true situation in the marketplace. That truth is determined by the customers who make up the market, not the owners who have the machines. It doesn’t mean that the situation is hopeless, though, only that the perspective changes.

A different take:

What marketing can do in the scenario above is to reposition the company.  What does this involve?

  1. Pain mitigation – Finding the right customer and product mix to utilize undepreciated machinery profitably until it can be phased out. This probably doesn’t mean “filling the machines.” Rather, it involves optimization of capabilities to try to keep these machines from draining company resources.
  2. Identifying New Opportunity – This requires a realistic assessment of the market. Frequently, an aversion to investing in a new area that “doesn’t run the presses” goes right along with the machinery focus I’ve described above.   Another conviction is that the cost of investment must be high in order to create barriers to entry for competitors.  Today, these attitudes are just dangerous. A low cost, high profit investment that brings the company into a growing market might be just the solution needed to offset declining profits from “big metal” investments.  A realistic assessment also entails the realization that new investments might be in people, not machinery.

  3. Matching the message to the market – No amount of clever marketing will be able to convince a customer to continue to buy something that he really doesn’t need or want.  The purpose of marketing is to match products and capabilities to real needs that already exist. Better yet, marketing can match a capability to a need where no product currently exists. That’s a great opportunity.
Gutenberg

Johannes was an innovator.

Where do we land?

It’s not about the machines, dammit!  I believe that a paradigm shift is necessary for printing companies that are going to survive in this brave new world.  When Gutenberg invented the printing press in the 1400s, everything changed.  For the first time, information was available to large numbers of people, and the rate of progress increased exponentially.  The change we’re seeing today is the same, but different – the exponents are higher and the pace is faster. Survival means letting go of old business models in order to adapt to new ones.

What do you think?

I suspect that many will disagree with this post and I’d love to see your comments:

  • Are you still focused on “filling the machinery?” Can you justify this objective? Is it realistic?
  • How important is it to be a low cost provider?
  • Have you made a serious assessment of the market and your company’s position?
  • What changes in the marketplace have you identified? How are you adapting?

The Last Part

DP Marketing Services is a new business that provides marketing services and support for printing companies.  Part of our mission is to help our customers keep up with current marketing trends and practices.  We hope you’ll take a look at our website while you’re here.  If you’d like to talk about your business, we’d be most happy to get in touch.  You can contact Richard Dannenberg by phone at 478-719-4029, by email at richard@dpmktg.com, or you can fill out a contact form here on the website.

Photo attribution (Legos): Soonho Kong



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