Dealers--More Than Middle Men
In regards to technical services, manufacturers not long ago boasted their own captive, in-house technical service and support organizations and infrastructures. According to Tech Services International President Tom Faughnan, manufacturers enjoyed relatively high margins in both their consumables and electronic imaging offerings.
When consumable margins began to tumble, and a groundswell was created by the bundling philosophy and competition to bring down electronic imaging pricing, the ability of manufacturers to sustain these technical services diminished.
The Evolution of TPP
"Thus, the evolution of the third-party service provider (TPP) . . . This evolution, while still very young and not yet universally accepted, is also changing the way service suppliers and manufacturers are dealing with printers," Faughnan explains. "TPPs that generally service more than one manufacturer's equipment can now provide support to multiple pieces of equipment at a site, making it easier for a printer to protect its equipment investment. Previously, the printer would need to deal with multiple manufacturers for technical and applications support; they need now only deal with one, making consistency of delivery and ownership possible."
Some argue that when dealers' offerings of products shifted from consumables to include high-tech equipment and software, so did the needs of the customer and the complexity of the dealers' responsibilities. Robert L. FitzPatrick, a strategic planning facilitator, consultant, publisher and trade association advisor who specializes in marketing through independent distributors, is one of them. Since 1981, FitzPatrick has continuously published The Eagle, an independent journal that reports and analyzes distribution trends in the digital imaging field.
"For many dealers, about 25 percent of their products are composed of digital imaging and related products, which is a whole new field for them," FitzPatrick says.
As the field of dealers has gradually dwindled in number, Faughnan has noticed a marked change in the area of pricing, particularly with price equilibrium. Over the last five to eight years, he says, the balance of power has been with the end user, as overcapacity within consumables manufacturers was a reality. This overcapacity brought with it severe downward price pressure, as manufacturers looked to feed film lines and plate capabilities.