Expert Speak

There’s a Light at the End of the Tunnel

End of the Tunnel

Gartner, the global analyst firm, recently released a report on printer OEMs. It has predicted that the printer OEMS stand to lose around $13 billion in the next one year. The reason – procurement managers and other supply buyers are turning to remanufactured supplies as a cost cutting measure.

While Gartner says that downturn will impact the OEMs, is that really the only case?  Yes, downturn has affected many a businesses including OEMs who have taken desperate measures to save their skin. But is this also not a fact that businesses often turn to the grey market for raw material or for alternates to cut cost? Business-wise, it helps them to cut cost and offer a product at a cheaper cost then the rival.

In this case, printer supplies produce a higher margin than the product itself. Gartner says that this trend is leading to lower profits for printer OEMs. It also points out the potential for damage to the printer OEMs’ brand because of poor quality and counterfeits. And I must point out that OEMs, channel partners, vendors and all parties affected by counterparts are putting in efforts to counter fakes. Over the last few years, vendors have slashed prices of products to an atrocious low; low enough to compete with the fakes or counterfeits.

Plus they are offering attractive discounts, warranties and have enhanced services offered in the SLA. They are aware that a consumer has a lot of options. In fact, he is spoilt for choice. Competition is also forcing them to innovate ideas. My correspondents at Channel Times have done stories on how channel partners have started bundling products or products and services to increase business. The Indian channel is ready to experiment with ideas hitherto never thought about. It is coming out of the confines of its convenient and traditional business model. The thoughts and ideas are disruptive at times, and are a natural extension of its existing business. But the ideas and strategies are all new and more over, inclusive.

Gartner too says that OEMs are well-placed to take advantage of the challenges facing the re-manufacturers, and the marketing team must play a key part in this. OEMs already have the advantage of understanding the market, their competitors, and buyers’ preferences.

It is offering three steps for OEMs. The entire channel can benefit from it. I am reproducing these steps from a recent release Gartner issued and which Channel Times duly carried, in the hope that it helps the community.

Design a Marketing Campaign That Begins with Education: OEM marketers should create a campaign to educate buyers and users. It will explain why buyers should continue to choose its products, and why these products cost more than those of the remanufactures.

Execute the Campaign Aggressively: In the minds of some buyers, remanufactured supplies are both less expensive and more environmentally friendly. Original supplies also have substantial cost savings and environmental benefits, and OEMS must present their side of the story effectively.

Utilize PR and Legal Successes Judiciously: Some OEMs work hard to protect their patents and copyrights against re-manufacturers, but then fail to explain their legal actions in a way that customers can understand and appreciate. Even a favorable verdict can damage the image of vendors that come across as bullies. Public relations teams should address the OEM’s efforts proactively and explain the context fairly.

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