Defining Core Competencies —Sherburne
PART OF effectively marketing your firm is a clear understanding of what your business is about—what are your market differentiators, why do customers buy from you rather than someone else, and what would attract new customers to you rather than the guy down the street or the Internet storefront at their fingertips?
In his keynote address at EFI Connect 2007, Apple Fellow Guy Kawasaki’s advice, among other things, was to define your innovation or differentiation with a two- to three-word mantra, like Nike’s Authentic Athletic Performance, FedEx’s Peace of Mind, eBay’s Democratize Commerce. This is a good approach that makes it easy for your employees to articulate your value at a top level, or your customers to remember you and identify you with key concepts. But, obviously, developing a marketing strategy needs to go much deeper than that.
One approach is to just say, “I am a printer, and I print anything that comes in the door.” Many businesses do that, and can still make a decent living that way. But it is getting harder and harder to do so.
June’s announcement by Vista-Print that the online print provider would now be offering creative and mailing services, following a similar announcement from FedEx Kinko’s earlier this year, goes a long way (in a society that is so convenience driven) in explaining why it’s getting harder for printers to simply “print what comes through the door.”
Two firms I have recently spoken with have taken a different approach, with excellent results. They have spent time defining their core competencies and building a differentiated offering based on those competencies. And the results are interesting.
First, after 118 years in business, Fetter Printing announced in December 2006 that it had completely overhauled its management structure, as well as its vision for the future, walking away from some of its traditional lines of business in order to focus on others in which it can be a market leader.
This was a bold and unusual move and prompted me to contact Fetter President and COO Terry Gill to find out more. Gill told me that he and his team came to the realization that with finite resources, they couldn’t create a powerful enough value proposition that would allow them to dominate a category. They decided that they had to simplify their business and focus all of their resources on a limited set of vertical markets.
Fetter was already the number two supplier of labels to the paint and coatings segment. Gill says, “This industry traditionally has a heavy reliance on inventory and acceptance of high costs of obsolescence. We believed that if we could devote 100 percent of our resources to the label business, we could help them reduce their dependence on inventory, as well as reduce cycle times. We didn’t see that opportunity in direct marketing and commercial print, and that was what drove us down that path—the huge savings we believed we could help this segment achieve.”
Fetter then examined other customers to see what synergies there might be with other industries and settled on healthcare fulfillment. This seems like a pretty different kettle of fish, but Gill assured me that there were significant synergies, saying, “Actually, they are related in the sense that they are both data-intensive and highly regulated. We came from a direct marketing background, and we understand data. Print quality is expected—there is no premium that the market will pay for quality. We wanted to look at how we can help these two segments manage their information and assets better.”
Synergies with Industries
And that’s exactly what they did. What was bold about the move was that the company walked away from 40 percent of its top line revenue in focusing on these two industries. When asked how much of that top line revenue had been recouped since the company made the change, Gill states, “We haven’t recouped it in terms of top line sales, but we have made significant progress in recouping the value-added portion. Because our margins are so much better today, we don’t necessarily miss the top line revenue. We are doing much better with a smaller number at the top. Bigger isn’t always better, and we learned that lesson, as well.”
The other company is Modern Postcard, located in Carlsbad, CA. I recently visited their plant and found it to be an amazing operation. As the name implies, Modern Postcard primarily produces postcards from a state-of-the-art, 75,000-square-foot facility with 300 employees. About 50 percent of its production is 4x6˝ postcards, with the balance being larger postcards and triple- and quadruple-folded mini-catalogs.
According to President Blake Miller, Modern Postcard receives the vast majority, if not all, of its orders via the Web and has a talented team of inside sales and customer service personnel that ensures a high-touch experience for the SOHO customers who have been the company’s mainstay. Modern has a highly automated process that imposes cards for optimal gang printing on one of its three Komori presses and is experimenting with smaller runs of personalized postcards using its HP Indigo press.
Each press sheet arrives at the cutter with computerized instructions that make the cutting process fast and accurate. The final step is ink-jetting the cards and preparing them for the mail stream or bulk shipment to the customer.
Modern Postcard mails so many cards, it has two USPS employees on-site, and all mail leaving the facility goes directly to the postal distribution center for rapid insertion into the mail stream. Interestingly, the firm uses only one type of paper for everything, a custom stock that is manufactured to Modern Postcard’s specifications by International Paper.
Focus on Niche Markets
Modern Postcard is now starting to go after business in larger companies, maybe even some of those that Fetter walked away from. This is especially attractive in light of the effects of the recent postal reform, and Modern is already seeing a surge in demand for postcards and mini-catalogs, as direct mailers and catalogers look for more cost-effective ways to reach their target audiences without taking an increased hit on postal costs.
These are two great examples of firms that have focused on specific niches and become experts that deliver a truly differentiated service. Fetter is addressing two well-defined vertical markets with a limited universe of potential customers that find benefit beyond the simple printing of labels and are willing to pay for that value.
Modern Postcard is focused on a horizontal market that crosses almost all industries and business sizes, and has optimized its sales and manufacturing processes to cost-competitively deliver what you might assume is a commodity product, but with very good margins.
As we approach the final quarter of the year, isn’t it time for you to step back and analyze your business like these two firms did?
Who are your best customers and why? Which customers are most profitable, or do you even know? What motivates a customer to stay with you on a long-term basis, and how can you replicate that loyalty with other clients?
Invest the time now and enter 2008 with a plan for increased profitability through market differentiation. PI
About the Author
Cary Sherburne is a well-known journalist, author and strategic marketing consultant working primarily with the printing and publishing industry. She is a frequent speaker at industry events, a regular contributor to industry publications and has written three books, which are available for purchase through the Bookstore section on Printing Impressions’ Website (www.piworld.com). Sherburne can be reached at Cary@SherburneAssociates.com.