In this Business Insight feature - sponsored by EFI and written exclusively for Large Format Review - Rosemarie Monaco, CEO of Monaco International Ltd, an international marketing firm specialising in high technology and services, discusses why print businesses should think very carefully before they diversify their key activities...
"Every major company from Virgin to McDonald’s uses diversification strategy for growth. It insulates them from economic fluctuation and industry erosion. The two major means of diversification are concentric (related) and conglomerate (unrelated).
Owning everything from airlines to wineries, Virgin is indeed a conglomerate with a bevy of unrelated businesses. This way, if in the unlikely event that Virgin Airlines takes a nose dive, Richard Branson can drown his sorrows in one of his vineyards.
McDonald’s uses a related strategy, opening coffee shops such as McCafe to appeal to those who prefer a caffeine rush to hardening of the arteries. The fast-food chain has also extended its product offering with salad bars and “lite” meals to appeal to the wannabe health-conscious consumer.
What is important here is that every company needs to think outside the box if it wants to not only survive, but thrive. The printing industry is no exception. Commercial printers are acquiring design firms and software developers to broaden their portfolios, while large-format printers are examining new specialties such as packaging.
Regardless of your strategy, before you invest in a single piece of equipment, you need to do a little homework. Even before that, consider starting slowly. It will be easier to extend your current offerings before you venture into a new market.
First, ask your current customers what types of products you could provide that would make their lives a little easier or give them the benefit of one-stop shopping. Learn about all the types of promotions and projects they get involved with. Maybe that will give you some ideas of what you can offer.
Delve deeply. For example, perhaps you currently work with a trade show or exhibits manager at a corporation. A show manager often works hand in hand with the marketing group. Ask your client what the marketing department does to attract customers to their exhibit stand. Maybe you’ll learn that they’ve been thinking about giveaways that involve packages or personalised labels. Is this a one-time promo? Or is it something you can sell to other clients?
Second, do a little research on growth markets: labeling, packaging, interior design, textiles, etc. When you identify the one that is most appealing ask yourself these questions:
- What type of equipment will you need?
- Will it require add-ons, such as finishing modules?
- Can you work with your current personnel or do you have to hire and train new staff?
- Do you have sufficient space to add new equipment or will you have to expand?
- How much can you charge for the new products? What do companies currently pay? Can you afford to offer a better product with added value rather than relying on a lower price?
- How long is the learning curve?
- Will you be putting a strain on your current workflow or will you need to invest in new print management software?
- What is the sales potential?
- How can you differentiate from the competition?
- If you identify a product that will appeal to a new growth market, such as the textile industry, do you have the sales staff and expertise to approach this market?
Answering all of the above questions will not only allow you to identify the best way to extend your offerings or enter new markets, it will also give you all the information you need for a business plan. And that is something you will absolutely need to get a business loan.
There’s lots of money to be made from extending your product line and entering new markets. Make an intelligent assessment before you invest. The worst thing you can do is implement a new capability with no one to pay for it."
About Rosemarie Monaco: With 25 years experience in the graphic arts industry, Rosemarie Monaco is an expert in technology marketing. She is CEO of Monaco International Ltd, an international marketing firm specialising in high technology and services.