enx magazine

Many of us have learned about the product lifecycle in a first or second year marketing class. Some company spends substantial sums on research and development to introduce a new product then they invest even more money to define a market. Eventually, the technology is adopted and the manufacturer can rely on a distribution channel, reducing their own sales and marketing costs. As the product and channel matures—and begins to exhibit the characteristics of maturity such as consolidation and attraction to newer technologies—the remaining manufactures shore up their distribution by again selling direct. If you have been in the copier channel for more than 25 years this scenario must seem eerily familiar.

There is no denying that the distribution channel for copier manufacturers has contracted. During the eighties and nineties, Danka and IKON snapped up independent dealers, eventually consolidating vendors with each consolidator choosing two copier vendors. (With a recent shift in strategy, IKON now distributes for four copier vendors and Global is still buying dealers, but their model provides for independent decisions on product). There are different statistics on the number of independent dealers, but it seems fairly safe to say that there were over 3,000 dealers when we entered the nineties and that there are somewhere around 1,000 dealers today. I think anyway you measure the dealer community, two thirds of the channel has been consolidated.

From a technology perspective, fax—a significant revenue stream for the copier manufacturer in the eighties and nineties—has been replaced by email and fax servers and the long discussed convergence of copiers and printers is building strength like a hurricane in the Gulf Stream. Although none of us in the independent channel like the manufacturers’ shift to a direct channel, the reasons are understandable.

Dealers cannot control the movement to direct, so the key is how to compete with this channel. IKON and Danka share many of the same characteristics of original equipment manufacturers (OEM), but they clearly are not an OEM so I will limit my discussion to true OEMs. Knowing how your competition will act is one key to beating your competition. There is one constant with the OEM channel—they will be proposing their own products. Although not always possible, one differentiator would be for you to be proposing a different product, and highlighting the advantages of that product. Therefore, it is almost a requirement for a dealer to carry two product lines.

Being different—or in marketing jargon, differentiating your company, product, or service—is always a key to winning in a competitive sales environment. As the two output channels have converged, copier-based MFPs have positioned you well against printers, and I believe that printers are one approach to differentiating yourself against a direct copier branch. I would seriously consider a major printer manufacture as your second or third product line.

Regardless of how seriously you get into printers, get into print management. One easy entry point into print management is to

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