The Third Wave: An Iron Tale about the Business of Print, Vol. 4
- Published: April 01, 2002, By Susan Kelly, Raine Consulting
Through our series of web articles in 2002, we hope to provide critical insights, specific industry examples, and thought-provoking ideas about how technology is impacting converters today. Raine’s white paper The Third Wave: An Iron Tale about the Business of Print is the third in a series of in-depth analyses of the relationship among technology, business growth, and the printing industry. The print industry provides an important benchmark to better examine trends impacting the converting industry.
This month, in this fourth column based on The Third Wave, we examine what’s driven some converting industry segments toward service diversification. The Third Wave: An Iron Tale about the Business of Print outlines the impact of an important trend in the printing industry: using other services as a means of bolstering top-line growth, profits, and customer satisfaction.
From the overall print perspective, print and paper associations are publishing and releasing their latest projections on the economic health of the print industry in full force. NAPL (National Association for Printing Leadership) and PIA (Printing Industries of America) economists concur traditional print offerings will experience lackluster growth over the next two years. From this, an interesting consensus has developed. The collective school of thought preaches that extended services outside of print will be the differentiators and, ultimately, will pay the bills.
"The commodity components of the print business will not change, but the value pieces--the real differentiators among firms--is where some interesting margin, growth, and positioning opportunities might exist," says Robert Young, OEM Director of Sales, Microsoft Corp.
Commercial printing expansion--into services such as fulfillment, direct mail, and database management--is seen as a way to help printers diversify and move to a communications solutions provider role. And, because print is strongly driven by advertising, the recent drop in ad revenue growth to barely one percent is a threatening statistic for the health of printing. Thus, printers are talking more--and investing more—in supplementary services.
Converting and Commerical: The Differences
In the converting industry, there are both parallels and dramatic contrasts to commercial print.
The closest parallel on the varied world of converting is the consolidation and shrinking demand for traditional products in the forms industry. Industry giants such as Wallace and Standard Register have made sizeable investments in information technology to offer services such as kitting and fulfillment, distribution, and ordering portals and sophisticated payment-processing systems. These investments have helped offset forms shrinkage but have not been an across-the-board fix for the forms industry’s woes.
The other end of the spectrum is packaging, where the growth opportunities have been above GDP for several years. Successful companies in flex pack (flexible packaging), for example, have concentrated on developing their experience in materials and coating, rather than supporting services.
When segments of packaging commoditize, perhaps other services will become more important. Those services could be backward into true packaging-design capabilities or into services related to fulfillment, or perhaps into research and data collection that analyzes packaging alternatives and stores data, and demographics to help customer select the optimal promotional packaging alternative.
Whatever the ultimate direction, commercial print will provide a vital roadmap for the converting industry. If commercial printers can manage supplementary services profitably and grow them to be a significant part of their product offering, converters may consider a similar path.
This article is excerpted from the Raine whitepaper The Third Wave: An Iron Tale about the Business of Print, downloadable free of charge from RaineConsulting.com.
