The Emerging Business Model In The Printing Industry

As the printing industry evolves in today's ultra-competitive business environment, the printing companies still standing are, by and large, pretty well-run organizations.  Some have focused on a product niche such as short-run invitations or personalized childrens books.  Others have utilized Web technology to reduce transaction costs and build scale.  The vast majority, however, have managed to survive and prosper through some sort of diversification.

In this blog, we take a quick pulse on how this industry diversification is reshaping what it means to be a "printer" in the 21st century.  We surveyed publicly available information on what appear to be the world's five largest printing firms (sadly, only one of which is based in the U.S., and it is only #3), which are:

1. Toppan Printing (Japan)
2. Dai Nippon Printing (Japan)
3. Donnelley (R.R.) & Sons Co. (US)
4. Quebecor (Canada)
5. Rexam PLC (Germany),

to see what business models are emerging.  We found generally more forward-looking business planning at some (e.g., Toppan and Donnelley) than others, but all are doing more than putting ink on paper.

From the chart above, you can see what is called Concentric Diversification (in black).  These are really product extensions, which use the same or similar technology and sell to the same market.  Packaging, for example, is quite similar to traditional commercial printing.  Similarly, "creative" or graphic design is closely related to the pre-press work every printer requires to prepare files to print.  Mailing and fulfillment are also not big leaps, as printers have always had to distribute product.  All five of the companies we analyzed -- and most other commercial printers that we know -- have gotten through at least this level of concentric diversification.

Many of these large firms have ventured beyond concentric diversification, into horizontal and vertical integration (in gray).  Horizontal Integration occurs when products are produced with quite different technologies than the core business, but which are sold to the same market or channel. This strategy proves to be advantageous in a competitive market scenario, wherein the company has a loyal customer base.  Example: a hot dog vendor expanding to sell hamburgers.

Example of horizontal integration among the Top 5 include products like real-time point of purchase displays, e-paper, security tags, and semi-conductors, all of which have something to do with printing; and services like database, target marketing, video production, call centers, community social media hubs. 

Vertical Integration occurs when a company invests in it's own product supply chain to increase or guaranty market share or insure quality of production inputs.  Example 1: car company buys tire manufacturing business (backward vertical integration, as it is closer to the raw material).  Example 2 car company buys dealerships (forward vertical integration, as it is closest to the customer).  The only clear example of vertical integration we saw is one company's investment in a paper mill.

Many of these big printers have diversified even further away from their cores, into what's called Conglomerate Diversification (in white), where there is little or no connection to the core technology or market.  This is very similar to an investor holding a mix of stocks and bonds and precious metals to smooth out cyclical ups and downs.  At the still recognizably-related level, one company has invested in a writer's consortium.   Another claims to offer workforce solutions, an extension of outsourced fulfillment services.  In fact, Donnelley markets itself as a business process outsourcer like IBM or Accenture, and has even acquired OfficeTiger and Astron, allowing them to "create processes and distribution for mission-critical information for the world’s largest companies."

Many of the Top 5, particularly the Japanese printers, are actually part of large highly-diversified conglomerates, in which printing is just one line of business, not necessarily the "core".  We have not even bothered to chart these businesses, because they do not really indicate a new or emerging business model in the industry.

So, what does this all mean?  What will these Top 5 printers and other printers be doing in twenty years or fifty years?  Unfortunately, we do not have all of the answers, but we feel like Donnelley and Toppan are companies to watch.  The vision seems to extend well beyond becoming a multi-channel communications company -- they seem to be thinking about a tightly integrated but diverse set of products and services pushing in every direction.  The main connective tissue between the set of offerings will probably remain the customer -- a common market or channel.  It will be an interesting ride!

3D or not 3D

photo:  http://johnbalistreriartist.com

Is 3D Printing Really Printing?  So when someone first mentioned 3D printing to me I thought of traditional printing methods that were enhanced so that the end product would have some build up of materials that presented an image in a 3 dimension view or was what we all know as pop-up cards.  However, 3D printing is the actual creation of objects --not the enhancement of them -- such as ceramic sculptures, prosthetic limbs, to possible houses.

3D printing is a fascinating process where a three dimensional object is created by laying down successive layers of material. A 3D printer working with a 3D computer file makes a series of cross-sectional slices. Each slice is then printed one on top of the other to create the 3D object.

Professor John Balistreri and his team at Bowling Green State University created a binder material that was added to the direct printing of clay objects which enabled it to be fit for firing in a kiln.  Using this binder and the direct ceramic printing any virtual design that can be created as a 3D image can now be produced.

Whats even more incredible?  3D printing technology is currently being studied by biotech firms and academia for possible use in tissue engineering applications where organs and body parts are built using inkjet techniques.  3D printing can produce a personalized hip replacement in one pass

The use of 3D scanning technologies allow the replication of real objects without the use of molding techniques.

Currently the leading industries using 3D print technology include:  jewelry, footwear, industrial design, architecture, engineering and construction, automotive, aerospace, dental and medical industries.

So there may be no limit to the application of 3D print technology, but is it printing?  According to The American Heritage Dictionary, printing is "A mark or impression made in or on a surface by pressure."  I don't think 3D printing qualifies. Maybe it should be called 3D Print Fabrication, 3D Manufacturing, or 3D Formation?

Want to learn more about 3D Printing? Play the video to see a short demonstration or follow these links:


3D Printing is Spurring a Manufacturing Revolution
John Balistreri Ceramic Printing
The Next Trillion Dollar Industry: 3D Printing

Coffee Trivia Answers

Congratulations to Jessica Hilbert of Lobo & Pascale a financial planning firm in Wallingford, CT.  Jessica is our MEGA GRAND PRIZE winner!  She wins a month's worth of coffee and a beautiful new ceramic mug in which to enjoy it.  Our four other runners up also get the same ceramic mugs. 

We sent approximately 2,400 e-mails out.  Winners were supposed to answer all of the questions right, but this ended up being a tougher survey than we expected. Nobody got them all right; though some got close.  We picked the Top 5 responders instead.

The much ballyhooed MEGA GRAND PRIZE Bonus Round consisted of an additional coffee trivia question delivered via a broadcast text message to our
Top 5.   The M.G.P.B.R.winner was the first person to respond with the correct answer.  And that actually happened!

FYI, our bonus question was:  How many beans fit into an average coffee sack?  The answer: 600,000.

Here are the answers to the trivia survey.  As always thanks for playing!


Question 1:  The first Parisian cafe dedicated to serving coffee opened in 1689.  The majority of you answered this one correctly, but we tripped up a few with 1492 when Columbus sailed the ocean blue.

Question 2:  How many coffee bars are there in Italy? There are 200,000 coffee bars.

Question 3:  How many cups of coffee are consumed by the average American each year?  Well the answer is 400.  A lot of you went for the 1,400 which would work out to almost 4 cups of coffee a day.  BUZZZZZZ.

Question 4:  How many cups of coffee are consumed each year worldwide?  The majority of you were correct on this question answering 400 billion cups of coffee.  Wow!

Question 5:  Which country/region has the world's highest per capita annual coffee consumption?  The Scandanavians hold the title for this question.  Probably cold up there, huh?

Question 6:  For how long is coffee typically roasted?  10-20 minutes is the correct answer.  Only half of you got that right, but, at least, nobody said, "1 year."

Question 7:  If you request a latte in Italy, you'll be served a glass of milk.  That's what "latte" means.  Of course, everything tastes better over there, including the milk.

Question 8:  Coffee was allegedly discovered by a goat-herder in Ethiopia.  As legend has it, this occurred when after he noticed that his goats perked up a lot after eating some coffee cherries off the bush.

Question 9:  Cowboys made their coffee by putting ground coffee into a clean sock, immersing it in cold water, and heating it over a campfire.  When ready they would pour the coffee into tin cups to drink.  We're not sure how clean those socks were either!

Thanks for playing!!!!

Coffee Trivia

Okay coffee expert... See how well you do with our coffee trivia survey below.

Respondents with all correct answers will win a ceramic coffee mug AND qualify for our Bonus Round (texting capabilities required). 

Our bonus round Mega-Grand Prize is soooo big, it's sure to give you a buzz.  So check back on Thursday, March 3, 2011 to see your results and whether or not you qualify.  We will have Round 1 answers posted by noon... and further instructions about the Bonus Round at that time.

Good Luck!

Survey:

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