Thursday, May 11, 2006
Surprise! Print is NOT a Commodity
There is much handwringing and lamenting (dare I say "whining"?) about print being a commodity. This is usually heard in discussions about the fierce price competition within the industry. Printers are always told of the way out of "commodity pricing" is to offer marketing solutions and become their clients communications service. We will review these concepts in future issues.
But for now, I can't think of a better place to be than in commodities. Surprised? ExxonMobil, a commodity company, posted profits that were so high that it created screaming lynch mobs of journalists and politicians. DeBeers is a world monopoly that mines diamonds, a valuable commodity, of course. Gold prices have gone up significantly, creating fear of inflation and worldwide financial turmoil. I can't ever remember print ever having these kinds of commodity pricing "problems." If we were in these commodity businesses we could unwring our hands and start dancing in the streets.
The American Heritage Dictionary states that a "commodity" is "an article of trade or commerce, especially an agricultural or mining product that can be processed and resold."
And there's the issues: "article" and "can be processed and resold."
While the print business uses materials and chemicals like paper and ink that originate from pure commodities like wood pulp and oil at some point in their manufacture, printing cannot be a commodity itself. Print is not an "article of trade or commerce," it is a process that is applied to materials for a single buyer. Print does not change those materials and create something totally different. The paper is still paper. The ink sits on the paper. It's not like we've taken a tree and turned it into a grand piano, or took a barrel of oil and created carpeting or polyester pants. We're also not about to start reselling print, because there is only one buyer for a particular print job. If printers could, someone would have figured out how already, and there would probably be an association seminar about it.
What is print then? Clearly, the commodity aspect of print, though the selection of the word is poor, is that so many people have the equipment to do it. A consultant friend of mine, Bob Rosen, often peppers his presentations with the line "God must love printers because he made so many of them."
Printing technology has advanced to a point where craft skill is encased in software, and the variation of print quality between shops has narrowed greatly. The mystery of print has disappeared. Our secrets have been revealed, and now you click "file" and then "print." Well, almost.
When we talk to print buyers they claim that they see all printers as offering about the same quality. Yes, technology has raised mediocrity to a higher, predictable, less variable level. That means the best quality at premium prices is a harder sell than ever.
So print is not a commodity in the strict sense of the word. If it was a commodity, we could stockpile it and wait for better prices. We could sell printing futures in a marketplace. We could trade it at the Chicago Mercantile Exchange among people wearing funny- colored jackets who spend the day screaming at each other as they fight for each cent advantage among other buyers and sellers. The ability to print is more like a commodity, not print itself.
If sales people in our industry act like print is an undifferentiated commodity, then that's the way buyers will understand it, and respond accordingly. Is there a meaningful difference between printers? Some printers will point to their equipment. But using technology as a way to differentiate a printing company ended not long after desktop publishing took hold. Digital printing limits marketing differentiation on the basis of equipment as well. The fact that your company owns a certain type of technology when others don't creates a saleable marketing window that lasts only a short period of time before a competitor buys the same thing or the next technological wave comes.
What really matters? Knowing a client's communications objectives and finding ways to facilitate the implementation of them is the winning business strategy. While this strategy does little to change the nature of pricing in our industry, it does affect a company's ability to attract, retain, and broaden their business with their customers. Getting jobs consistently requires a relationship well beyond the "here's a copy of our equipment list; can we bid on your next job?" approach which creates an unpredictable, haphazard flow of business where every incoming job is a surprise. Insights, solutions, and new ideas are hot commodities clients seek. Let everyone else sell their ability to apply thin coatings of liquids to substrates.
There are more media seeking their share of media communications budgets than ever. Having the capability to print well is not the big deal it used to be. Helping clients get superior results out of those limited budget dollars gets the print business out of its self-imposed commodity game. That is, only if printers decide that's the nature of their business.
But for now, I can't think of a better place to be than in commodities. Surprised? ExxonMobil, a commodity company, posted profits that were so high that it created screaming lynch mobs of journalists and politicians. DeBeers is a world monopoly that mines diamonds, a valuable commodity, of course. Gold prices have gone up significantly, creating fear of inflation and worldwide financial turmoil. I can't ever remember print ever having these kinds of commodity pricing "problems." If we were in these commodity businesses we could unwring our hands and start dancing in the streets.
The American Heritage Dictionary states that a "commodity" is "an article of trade or commerce, especially an agricultural or mining product that can be processed and resold."
And there's the issues: "article" and "can be processed and resold."
While the print business uses materials and chemicals like paper and ink that originate from pure commodities like wood pulp and oil at some point in their manufacture, printing cannot be a commodity itself. Print is not an "article of trade or commerce," it is a process that is applied to materials for a single buyer. Print does not change those materials and create something totally different. The paper is still paper. The ink sits on the paper. It's not like we've taken a tree and turned it into a grand piano, or took a barrel of oil and created carpeting or polyester pants. We're also not about to start reselling print, because there is only one buyer for a particular print job. If printers could, someone would have figured out how already, and there would probably be an association seminar about it.
What is print then? Clearly, the commodity aspect of print, though the selection of the word is poor, is that so many people have the equipment to do it. A consultant friend of mine, Bob Rosen, often peppers his presentations with the line "God must love printers because he made so many of them."
Printing technology has advanced to a point where craft skill is encased in software, and the variation of print quality between shops has narrowed greatly. The mystery of print has disappeared. Our secrets have been revealed, and now you click "file" and then "print." Well, almost.
When we talk to print buyers they claim that they see all printers as offering about the same quality. Yes, technology has raised mediocrity to a higher, predictable, less variable level. That means the best quality at premium prices is a harder sell than ever.
So print is not a commodity in the strict sense of the word. If it was a commodity, we could stockpile it and wait for better prices. We could sell printing futures in a marketplace. We could trade it at the Chicago Mercantile Exchange among people wearing funny- colored jackets who spend the day screaming at each other as they fight for each cent advantage among other buyers and sellers. The ability to print is more like a commodity, not print itself.
If sales people in our industry act like print is an undifferentiated commodity, then that's the way buyers will understand it, and respond accordingly. Is there a meaningful difference between printers? Some printers will point to their equipment. But using technology as a way to differentiate a printing company ended not long after desktop publishing took hold. Digital printing limits marketing differentiation on the basis of equipment as well. The fact that your company owns a certain type of technology when others don't creates a saleable marketing window that lasts only a short period of time before a competitor buys the same thing or the next technological wave comes.
What really matters? Knowing a client's communications objectives and finding ways to facilitate the implementation of them is the winning business strategy. While this strategy does little to change the nature of pricing in our industry, it does affect a company's ability to attract, retain, and broaden their business with their customers. Getting jobs consistently requires a relationship well beyond the "here's a copy of our equipment list; can we bid on your next job?" approach which creates an unpredictable, haphazard flow of business where every incoming job is a surprise. Insights, solutions, and new ideas are hot commodities clients seek. Let everyone else sell their ability to apply thin coatings of liquids to substrates.
There are more media seeking their share of media communications budgets than ever. Having the capability to print well is not the big deal it used to be. Helping clients get superior results out of those limited budget dollars gets the print business out of its self-imposed commodity game. That is, only if printers decide that's the nature of their business.
# posted by DrJoeWebb @ 5:13 AM 
