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Xerox did it. America OnLine and Time Warner have done it. Print industry suppliers and manufacturers are about to do it. Like a frontier land rush, big companies are moving beyond the factory gates to get closer to future customers.
Call it "customer corralling," a new way to attract, feed and grow customer loyalty by giving potential customers a wide selection of value-added goods and services to pick from. It's not just about building equipment or making supplies anymore.
Nokia doesn't build phones, it provides communication solutions. Xerox refocused as a document company, not a maker of copiers. Press manufacturer Heidelberg snapped up Louson-Desonite as a way to reach a new market segment. Creo partnered with Scitex to get a technological and competitive advantage. The list goes on.
Around the globe traditional "heavy metal" manufacturers are coming to the same conclusion -- service, and all the lucrative spin-offs, is a sure-fire route to customer hearts. It's also an excellent new market offering long-term, new revenue streams in the otherwise mature manufacturing sector.
It's a case of morph or die.
"Some companies can, some can't make the transition," says Peggy Cunningham, a Queen's University associate professor of marketing strategy. As a business consultant, she's seen companies that didn't get it. "Saying 'Oh, it's just being polite to the customer' is missing the boat on service."
Her view is manufacturers organized around selling products must fundamentally restructure their corporations to sell to precise market segments or customer profiles.
"Rather than having individual product managers, now you're marketing by customer segment or tier of customer -- that's a huge mental and structural shift for companies because now customers are crossing over (traditional product) boundaries," Cunningham says.
Canadian manufacturers, including those supplying the printing industry, are pondering just such radical corporate surgery because they see limited growth based on selling "commodities."
Manufacturers worry their customers now relate to them only on a price-based level. Customers may love the product quality, the service, but they always find fault with price sooner or later. What's manufacturer to do? Competitors hover outside the client's door, anxious to cut prices in order to capture a new account.
So the manufacturer deals. Margins go down. Manufacturing costs don't Profits constrict. Shareholders squawk. The...