Printing and Publishing
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Written by Stephen Hill, 2007   

Print management, we know, is a powerful and growing facet of the print supply chain, but where are these companies trying to make money, asks Stephen Hill, and are they good enough to help your business? 

On the back of exclusive, direct research into the print management sector, Pira has been able to forecast changes and developments, as well as get a feel for the qualities of the print management companies already operating. This article assesses the qualitative market dynamics for print management across Europe to identify opportunities for print management companies and strategies they might follow. Some of the key top-line conclusions of the research are:
  • Print management companies have a large potential market to attack that is currently supplied direct from printers.
  • Italy is a prime area to attack while Germany has the lowest penetration of print management.
  • The travel and leisure market sector has the lowest satisfaction rating with current suppliers and is a good target for print management.
  • A majority of survey respondents agree that print managers should be independent of print manufacturing with the exception of some specialist capability, such as digital printing.
  • Respondents do not agree that print managers should be part of a print group.
  • Williams-Lea has the most recognised brand name, both prompted and unprompted.
  • For unprompted recognition, Astron and Communisis were placed second and third with Centurion and Xerox Business Services occupying those places from the name list.

Print management opportunities

Across Europe the print market was worth some €120 billion in 2004, while it is forecast to grow to €131 billion by 2009.

That forecast growth represents the opportunity that print management companies should aim for. The opportunity, in fact, is even greater if other major print markets in North America and Asia are considered.

It is unlikely that all print is a suitable candidate with the proliferation of many small, local businesses placing one-off low-value jobs with their neighbourhood printer, and with large publishers having their own newspaper, book or magazine production plant. However, even these are candidates for outsourcing - for the print manager to take over the operation of the capacity, as has happened for in-plants and specialist document production facilities.

UK

In the UK print management is valued at £2.21 billion (€3.29 billion), with the major print managers turning over 85 per cent of that, some €2.78 billion. The remaining 15 per cent is accounted for by printers placing their work in the trade.

Europe

Europe-wide, the survey suggests that, of the market total, some 40.8 per cent of buyers either use or may use print management, placing a value of €49 billion as a more realistic potential market, growing to €53 billion by 2009. Take out the 15 per cent of trade activity (based on the available UK figures) and the opportunity drops to €41.7 billion in 2004 and €45 billion in 2009.

The forecast from current trends is for European print management in 2009 to be worth €18.4 billion so - of the €45 billion potential market - there is an opportunity for print managers to gain an additional €27 billion business, if they can provide the right services to the right buyers. The leaders will be international and the potential outside Europe is proportionally much larger.

Regional differences

Across Europe print management accounts for 12.2 per cent of the print market, with the UK, Spain and France above the norm. There are opportunities in the Netherlands, Scandinavia, Austria, Italy, Ireland, Switzerland, Belgium and particularly Germany.

The UK buyers rank their suppliers the highest for service, quality and value for money, followed by Spain, Germany, France and Italy. The lowest satisfaction is for value, a key area for suppliers to win new business, so Italy potentially offers the best opportunity with lowest penetration of print management and satisfaction with current suppliers.

All country buyers rank the unit costs as by far the most important factor in determining the choice of a print supplier, followed by overall process cost reduction and the opportunity for buyers to add value. Headcount reduction is significantly less important for all countries. This is, of course, unsurprising, but it is a customer outlook that print management companies may well need to change. As printers get smarter - and they avowedly are, particularly as the digital workflow becomes more mature - print management companies will have to offer something beyond sheer unit cost, because if printers sell direct more competitively and more accurately margins will be squeezed. Added-value offerings for customers could become an important differentiator for print management.

Market sectors

The highest penetration of print management is in the telecom/IT sector where the demands of Nokia and Ericsson boost the Scandinavian print management sector. The financial services sector offers the highest growth opportunities.

Publishing is the sector most reluctant to use print management as the existing buyers are generally skilled in managing print. However, there may be opportunities to take over the editorial and advertising functions to outsource print on their behalf, maybe taking over the running of specialist print units.

The travel/leisure sector reports the lowest satisfaction with current print suppliers by a significant margin while the demanding financial services are most happy with theirs.

The unit cost is ranked as the key issue determining the choice of print supplier in all sectors. For the telecom/IT, financial services and public sectors the opportunity for suppliers to add value is rated ahead of process cost reduction. This shows the opportunity, particularly for specialist document management applications such as itemised billing, personalised certificates or preparing taxation demands etc.

As discussed previously, buyers will automatically rank costs as important. This tends to boost the rating of unit cost, which is over-emphasised in the table. Pharmaceutical buyers rate unit cost most highly while telecoms/IT and the financial services rate the opportunity for suppliers to add value most highly. Overall cost reduction, looking at the whole supply chain, is seen as most important by the travel and leisure sector.

It is the office stationery and business forms that leads the way for much of the print management market, with more than half supplied through print management and specialised forms brokers. Many suppliers have concentrated on manufacturing, leaving the sales and marketing functions to their print management customers.

It is document management that is growing fastest, with suppliers taking forms applications for their customers, and instead of simply providing the base stock they will move into data manipulation, personalisation and distribution of documents. Applications include billing, statements, invoicing and into fulfilment services.

Labels and packaging show the lowest satisfaction rating of all products suggesting opportunities for capable suppliers.

Again the unit cost is ranked as the most important issue in the choice of print supplier for all sectors. For newspapers, books and magazines the opportunity to add value by supplier is way behind the cost issues. For document management the added-value opportunity is ranked ahead of the process cost reduction.

Perception of the print management market

As part of the Pira questionnaire, respondents were pushed to explore the perception of the status, activities and potential futures of the print management market for buyers, print management companies and printers. Unsurprisingly these sectors have different opinions on the subject.

Print management companies' views of print management

The overall growth of print management is forecast to be 25.8 per cent to 2009, well over the 9.9 per cent of the overall print market. The print managers certainly agree with the premise that the sector is well positioned. Here, 60 per cent is a neutral response, a higher figure indicates agreement, and anything lower than 60 per cent is disagreement with the proposal.

Print managers strongly agree that the sector is currently growing faster than the overall print industry. No respondents disagreed with this premise. There is some disagreement that print management will grow even if the print sector stalls or falls, but a significant majority agree that will be the case. The print managers rank the desire for lower cost and improvements in service as equivalent drivers for the growth of print management.

However buyers overall rank cost as a more important issue for the choice of a print supplier. Print managers vehemently disagree that print management will be a short-lived blip that will disappear (with almost 75 per cent disagreeing and 42 per cent strongly disagreeing).

Printers' views of print management

Print managers generally see their activities as a threat to printers (with 42 per cent seeing it as a threat and 37 per cent disagreeing), although there is a higher proportion of strong disagreement than strong agreement. Unsurprisingly this is mirrored by the printers responding to the question "Do print managers represent a threat to printers?"

Outlook

None of this should be a surprise - but clearly this antagonism of responses from printer and print managers show they are locked in a kind of battle, that both seem to believe they will win. The customer, ultimately, will decide, but there appears to be a great deal of room for both parties to attract new business. The vagaries of the digital era threaten old assumptions and, as in broad technology sectors, working practices shift dramatically to make dramatic new profits - witness of course Google or, say, in reference publishing, Wikipedia. Printers who dramatically improve their communication with customers, giving them clear, accurate information with attendant cost savings, can hurt print managers; print managers who achieve added-value services that generate real profit, allied to unit cost reduction, can make life difficult for lazy, backward-looking printers. Such a competitive rivalry will drive changes, and customers must be ready to take advantage

Takeaways

  • There is a large possible market for print management companies to attack that is supplied by printers at the moment.
  • The market sector with the lowest rating for satisfaction with current suppliers is travel and leisure, which makes it a good target for the print management industry.
  • Currently, value is rated as the least satisfactory facet of the industry, which means new suppliers have a chance to win new business, with a low-rated country like Italy particularly likely to bear fruit.
  • Buyers from all countries rank unit costs as the most important factor by far in determining the choice of a print supplier.
  • As printers get smarter, which they are, given the increasing experience they have with the digital supply chain, print management companies will have to offer something beyond sheer unit cost.
  • The highest penetration of print management is in the telecom/IT sector particularly with major companies like Nokia and Ericsson.
  • Publishing is the sector most reluctant to use print management, as the existing buyers are generally skilled in managing print.
  • The business form and office stationery sector leads the way for a great deal of the print management market.
  • Document management is growing fastest, with suppliers taking forms applications for their customers, and instead of simply providing the base stock move into data manipulation, personalisation and distribution of documents.
  • Print managers strongly believe that the sector is currently growing faster than the overall print industry.
  • There seems to be a great deal of room for both printers and print managers to attract new business.
  • Printers who seriously improve their communication with customers can hurt print managers.

This article contains research from the report The Future of Print Management, published recently by Pira. To find out more, or to order a copy, contact Stephen Hill on email: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
 
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